Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — ENVIRONMENT

Housing Cost Yardsticks

Mr. Chapman: asked the Secretary of State for the Environment what representations he has received from local authorities and the building industry on the current levels of housing cost yardsticks; and if he will make a statement.

Mr. Geoffrey Finsberg: asked the Secretary of State for the Environment what evidence has been submitted to his Department since the invitation to local authorities last May to comment on any aspect of the cost yardstick system; and whether, in the light of this evidence, he now considers alterations in the system are necessary.

The Minister for Housing and Construction (Mr. Julian Amery): I have received representations from the local authority associations and the building industry about the level and structure of the housing cost yardstick. These are currently being studied.

Mr. Chapman: As the housing cost yardstick would have to be increased by about 12 per cent. to maintain its real cost level as compared with July, 1967, does not my right hon. Friend agree that its present inadequacy is affecting the design, layout and standards of housing, and that because of this too many local authorities are negotiating ad hoc arrangements which are bringing the whole, over-complex system into disrepute?

Mr. Amery: I can assure my hon. Friend that I am very conscious of the point he has just made.

Mr. Finsberg: Is my right hon. Friend also conscious of the fact that the inordinate delay in bringing the yardstick up to date is not contributing to the success of the housing programme, although we bear in mind that its introduction was a major contributory factor in the slowing down of the housing programme under the last Government?

Mr. Amery: My hon. Friend will recognise that announcements about the yardstick, like announcements about Bank Rate, must be made at the moment when they are made and cannot be anticipated in discussion.

Mr. Arthur Jones: Does my right hon. Friend think that fixed-price tendering is significant in the question of the yardstick?

Mr. Amery: I hope that my hon. Friend will agree that our adherence to the policy of fixed-price tendering was one of the factors which enabled us to give the Budget which we gave yesterday.

Mr. Wellbeloved: What representations has the right hon. Gentleman received from the Greater London Council about the application of cost yardsticks to its Thamesmead development, where the costs are almost double the cost yardstick arrangements laid down by the Ministry?

Mr. Amery: If the hon. Gentleman would like to put down a Question on that specific point, I should be glad to answer it.

Housing Subsidies

Mr. Skinner: asked the Secretary of State for the Environment whether he has now completed the consultations with the local authority associations regarding the new form of housing subsidies.

Mr. Amery: Consultations are still in progress.

Mr. Skinner: Is the right hon. Gentleman aware that the longer the consultations with the local authority associations go on, the more alarming the prospect of massive council rent increases becomes? Will he now tell the House that there will


be no council rent increases of £1 a week as a result of the negotiations and the cuts that will follow?

Mr. Amery: I must ask the hon. Gentleman to await the conclusion of my discussions with the local authority associations. As I have said previously, I shall make as full a statement as possible to the House when they are over.

Mr. Frank Allaun: How did the councils react to the right hon. Gentleman's recent statement that loans already entered into for 60 years at 4 per cent. will not be honoured? Is not it inevitable that his scheme, whatever it is, will mean the doubling and trebling of many council rents following the reduction of the subsidy by £150 million a year?

Mr. Amery: The hon. Gentleman is asking two questions which are not on the Order Paper. We have been discussing with the local authority associations the method of progressing to fair rents.

Mr. Crosland: Has the right hon. Gentleman seen the recent report of the National Economic Development Office suggesting that council house building, if nothing is done, is likely to decline throughout the decade? What element in the proposed new policy is likely to arrest that decline?

Mr. Amery: The right hon. Gentleman should await my fuller statement when my deliberations with the local authority associations are completed. But I can say here and now that one aim of our proposals is to give the local authorities greater resources and greater incentive to build in the areas of stress.

Heavy Lorries (Nuisance and Loss of Amenity)

Mr. Michael McNair-Wilson: asked the Secretary of State for the Environment whether his Department will carry out a survey of London roads used by heavy lorries to assess the amount of nuisance and loss of amenity caused by this type of vehicle.

The Secretary of State for the Environment (Mr. Peter Walker): No, Sir. This would be a matter for the Greater London Council.

Mr. McNair-Wilson: Does my right hon. Friend agree that there is a need for

plans for all the major cities, especially London, because heavy lorries trundling through residential areas cause damage through vibration and problems and considerable stress to the residents through noise and inconvenience? Will he look at the experiment of having totally lorry-free zones which is to be carried out in the centre of Paris?

Mr. Walker: Yes, Sir, but traffic control is a matter for the local authorities. We are looking worldwide at experiments in this sphere and advising the traffic authorities about them. There is need for proper traffic control over heavy lorries.

Mr. George Cunningham: Will the right hon. Gentleman recognise that the efforts of the G.L.C. on this matter are to some extent impeded by the attitude of the Metropolitan Police and the difficulties of administration? Will he have discussions with the Home Secretary on that point?

Mr. Walker: We are constantly having discussions about enforcement by the police and others through traffic and parking control. I agree that if parking control were properly enforced, it would help the flow of traffic considerably.

Channel Tunnel

Mr. Sheldon: asked the Secretary of State for the Environment if he will now make a further statement on the Channel Tunnel.

The Minister for Transport Industries (Mr. John Peyton): The French Minister of Transport visited London on 22nd March for talks on the Channel Tunnel project with representatives of the international private group. I will with permission circulate in the OFFICIAL REPORT the text of the communiqué.

Mr. Sheldon: Will the reply give any of the figures the right hon. Gentleman promised to give me if I put down a Written Question—but which I have not yet received? Will it include any possibilities of examining alternative methods of a Channel link, including a roadway? Is the right hon. Gentleman aware that new studies are required going even further than that which he is prepared to have because, even if his Department has stood


still in this matter over the last nine years, engineering technology has not?

Mr. Peyton: There is no disagreement between us here. There is no question of my Department having stood still for nine years. We are engaged on the first phase of the final studies which will produce the figures for which the hon. Gentleman has persistently and properly asked. As soon as they are available, I will make them available to the House.

Mr. Dodds-Parker: Does not my right hon. Friend agree that an early decision to go ahead with the Channel Tunnel would take a considerable load off the number of aircraft landings envisaged for the rest of the decade?

Mr. Peyton: My hon. Friend is right in pointing out that the tunnel is merely an alternative among the choices of ways of crossing the Channel. In future, there will be a greatly increased demand for facilities and the tunnel is, in my view, one of the tidy and acceptable alternatives—provided, of course, that the final studies turn out as we hope they will.

The text of the communiqué is as follows:

CHANNEL TUNNEL—A NEW PHASE BEGINS

Monsieur Jean Chament, French Minister of Transport, visited London yesterday for talks on the Channel Tunnel with Mr. John Peyton, Minister for Transport Industries.

The talks were held at Lancaster House, where M. Chament and the French Ambassador, Baron de Courcel were entertained at lunch and where the two Ministers later held a joint meeting with British and French representatives of the international private group which in 1970 submitted proposals to the two governments for the finance and construction of a rail Channel Tunnel.

A list of current membership of the private group is beneath.

The two Ministers have since announced that they have chosen the Group for the further pursuit of the project and that the next phase is to begin at once.

The two Ministers and the Group have agreed the Heads of Terms on which the completion of final studies and preliminary works will be undertaken, and the basis for negotiating the terms on which the Tunnel could subsequently be built and operated.

The Tunnel would be financed partly from private risk-capital (10–30 per cent.) and partly by government-guaranteed debt. Private-sector Companies set up by the Group in Britain and France would arrange the finance and construction, hand over the completed Tunnel to the operating authority and be remunerated from its revenues. The Companies would

receive a share of profits and a degree of control over the commercial policy of the tunnel related to the degree of risk they assumed, subject always to a sufficient degree of public control to safeguard the public interest.

For the meantime, the Group have agreed to make an immediate start, at their own expense, on the first phase of these final studies, lasting one year. The two governments would buy these studies from the Group, at cost, if, for any reason, the Governments and the Group should be unable to enter into a formal agreement covering the next stage of the project.

On present estimates the final decision to build the Tunnel would be taken in 1973, with the Tunnel coming into service in 1978.

CHANNEL TUNNEL

MEMBERSHIP OF THE PRIVATE GROUP

The Channel Tunnel Company Limited.
The Rio Tinto-Zinc Corporation Limited.
Morgan Grenfell &amp; Company Limited.
Robert Fleming &amp; Company Limited.
Hill Samuel &amp; Company Limited.
Kleinwort, Benson Limited.
British Railways Board.
S. G. Warburg &amp; Company Limited.
Morgan Stanley &amp; Company.
The First Boston Corporation.
White, Weld &amp; Company Limited.
Campagnie Financière de Suez et de l'Union Parisienne.
Compagnie du Nord.
Banque Louis-Dreyfus.
Banque de Paris et des Pays-Bas.
Banque Nationale de Paris.
Crédit Lyonnais.
Société Générale.
Banque de l'Union Européenne Industrielle et Financiére.
Crédit Commercial de France.
SNCF.

Thomas Cook &amp; Son Limited

Mr. Sheldon: asked the Secretary of State for the Environment if he will now make a further statement on the proposed sale of Thomas Cook & Son.

Mr. Peyton: Not yet, Sir.

Mr. Sheldon: Does the right hon. Gentleman intend to demand a valuation of the assets of Thomas Cook? What will be the basis of that valuation? If he has no valuation, how can he say that bids will be high?

Mr. Peyton: I hope that the Chairman of the Transport Holding Company will be able in due course to provide me with a reasonably good assessment of the value of the assets of Thomas Cook. I hope that the eventual sale will yield a price substantially above any valuation that is likely to emerge.

Sir G. Nabarro: Does my right hon. Friend recall that, between 1951 and 1955, the Tory Party dilly-dallied on the denationalisation of heavy road transport, with the result that, in 1956, the rump of such transport was left in public ownership and never denationalised? Will he, therefore, get on with the Thomas Cook operation, selling upon the open market at the highest price and not wasting a moment in the process?

Mr. Peyton: I assure my hon. Friend that there is no intention in the Government to dilly-dally with the sale of Thomas Cook and Son.

Empty Houses (Short-Term Accommodation)

Mr. Geoffrey Finsberg: asked the Secretary of State for the Environment if he will issue a circular to local authorities urging greater use to be made, as short-term housing accommodation, of houses standing empty pending redevelopment.

Mr. Amery: A circular letter to this effect was sent to all housing authorities in London, where the problem is particularly important, on 4th July, 1969.
I recently reinforced the point in a speech which I made on 12th February, 1971. to the London housing managers. I will send a copy of the circular and of my speech to my hon. Friend.

Mr. Finsberg: Is my right hon. Friend satisfied with the response he has received so far? Have any boroughs in London, in addition to the progressive borough of Camden, taken any action on this?

Mr. Amery: I think that some have done better than others.

Peak District National Park

Mr. David Clark: asked the Secretary of State for the Environment if he is satisfied that there is sufficient public access to open moorland in the Peak District National Park; and if he will make a statement.

Mr. Peter Walker: The Peak Park Planning Board propose shortly to submit to me, and to advertise, a map showing the extent of land in the national park open to public access. It would not be appropriate for me to comment at this

stage on whether there is sufficient public access since I shall have to consider any representations that are made.

Mr. Clark: I thank the right hon. Gentleman for that reply. I, too, am pleased that this matter is going well. Is he aware that there is concern in the Peak District over the fact that there are many acres of uncultivated land immediately adjacent to the Pennine Way over which the public rarely go on to the Pennine Way because of huge "Private—keep off" signs?

Mr. Walker: I am aware of those anxieties. The Commission is doing all it can to gain access for the public to national parks.

Mr. J. H. Osborn: Will my right hon. Friend ensure that members of the public who want to go through the Peak District can do so easily and quickly? Will he give consideration to the construction of a motorway through the Peak District from east to west?

Mr. Walker: Motorways through national parks are not the most popular thing but I will consider what my hon. Friend has said.

Mr. Blenkinsop: Will the right hon. Gentleman take this matter rather more widely? Will he approach every local authority where the same problem exists and emphasise the need to advertise the possibilities of public access?

Mr. Walker: Yes, Sir.

Mr. Denis Howell: Will the right hon. Gentleman take up with owners and occupiers of land in national parks the question of the rights of the public? There have been some unfortunate incidents. For example, instructors of the C.C.P.R. have been threatened with shotguns by irate farmers in Snowdonia. Very often, the occupiers of such land are not aware of their responsibilities to members of the public in national parks.

Mr. Walker: Yes, Sir. We are doing all we can.

Royal Commission on Environmental Pollution

Mr. David Clark: asked the Secretary of State for the Environment if he will make a statement on the First Report


of the Royal Commission on Environmental Pollution.

Mr. Peter Walker: I strongly welcome this Report and I look forward to the future contribution the Commission can make to the development of our policy. I particularly welcome their intention to study the pollution of estuaries and inshore seas. I cannot forecast a date for their next report. My right hon. Friends and I are losing no time in studying their recommendations and in preparing to take the action that is needed.

Mr. Clark: I thank the right hon. Gentleman and I associate myself with his welcome to the Report. Is he aware, however, that there is a feeling in some quarters that the Commissioners have perhaps dealt with what I call certain "trendy" aspects of policy and have not paid enough attention to the historical industrial dereliction problems?

Mr. Walker: Over all, I thought it was a good Report and fairly objective and that perhaps it did not pursue some of the more fashionable lines which the Royal Commission might have been tempted to do. In my talks with Sir Eric Ashby and others, I found that they are fully aware of the problems of the clearance of derelict land.

Sir R. Thompson: Is my right hon. Friend aware that more and more people are becoming seriously alarmed at the decay in their environment and that anything he can do to speed up implementation even of parts of this Report will be very welcome to the country at large?

Mr. Walker: Already in terms of certain planning matters relating to water, air and noise pollution we have taken quite a few measures.

Sir G. de Freitas: Since the Report is so widely accepted as being enormously important, will the right hon. Gentleman do all he can to get a debate in the House on it?

Mr. Walker: I should be happy to have a debate, but that is not a question for me.

Mr. Fox: asked the Secretary of State for the Environment whether, in the light of the First Report of the Royal Commission on Environmental Pollution, he will initiate further research

into the effects of pollution from road vehicles; and if he will make a statement.

Mr. Peter Walker: I agree that further research is needed and plan to ensure that it is carried out. I am arranging for up-to-date measurements of lead concentrations to be obtained and will publish the results.

Mr. Fox: Would my right hon. Friend bear in mind that any increase of costs on the consumer or user would be quite intolerable and so unacceptable?

Mr. Walker: We have to make a proper estimate of the dangers which may or may not exist and that is why I am seeking the most up-to-date information, and I will make an assessment on that.

Mr. Atkinson: Is the right hon. Gentleman aware that his predecessor promised the House that he would look into the possibility of appointing engineers to the Royal Commission, other than the Chairman who was already there and who is a chemical engineer? Will he now promise to do that? Secondly, will he ask the Royal Commission to look into the dangers of pollution posed by the introduction into this country of the Wankel rotary engine and ask the Commission to give priority to a study of this engine, because it is believed by many leading engineers in this country and elsewhere that the Wankel rotary engine has a greater effect on pollution than the orthodox, traditional engine now used in this country?

Mr. Walker: I take note of the hon. Member's suggestion and I will certainly convey it to the Chairman, but this is the sort of work which is in the hands of the Commission and is not directed by me. However, I will bring the hon. Member's remarks to the attention of the Commission.

Mr. Fox: asked the Secretary of State for the Environment what steps he proposes to take, in the light of the First Report of the Royal Commission on Environmental Pollution, further to reduce traffic noise.

Mr. Peyton: I have already published proposals to reduce as from 1st October, 1973, the maximum permitted noise levels for most types of new vehicles.

Mr. Fox: In thanking my hon. Friend for that reply, may I ask him whether he


will bear in mind that the previous Government announced steps in this direction, and that to get the desirable results we need enforcement?

Mr. Peyton: Yes, I entirely accept what my hon. Friend said, and we shall look for enforcement by realistic regulations. There has been some disappointment in this field in the past. I certainly do not intend to relax the pressure.

Mr. Kaufman: On the subject of traffic noise, would the Minister take power to provide financial compensation—for example, to my constituents in New Bank Street, Longsight, whose homes are being made almost uninhabitable by noise from freight liner traffic passing by, and who need to double-glaze their homes to rid themselves of this intolerable noise?

Mr. Peyton: No, I could not promise compensation of the kind the hon. Member suggests. That is not to say that I am not well aware of this nuisance. I am certain that long-term plans have to be made to disperse heavy traffic out of heavily populated centres.

Mr. Michael McNair-Wilson: Will my hon. Friend not agree that enforcement is for the police and that they need a hand-held noise meter? Will my hon. Friend tell me what steps are being taken by his Department to produce such a meter?

Mr. Peyton: There are quite a number of successful prosecutions every year—about 12,000. I should like my hon. Friend to put down a Question on this subject and I will certainly conduct further researches into it, but my present prospects of producing a satisfactory hand-held noise meter are, I am bound to say, slightly remote.

Fleet Line (South-East London)

Mr. Moyle: asked the Secretary of State for the Environment when he will be in a position to announce his decision on the application by the Greater London Council for a grant for the construction of the Fleet Line in South-East London.

The Minister for Local Government and Development (Mr. Graham Page): My right hon. Friend is considering the application.

Mr. Moyle: Is the hon. Gentleman aware that, by this year, London Trans-

port Executive will probably have powers to construct a tube to New Cross and that by next year we hope to have powers to construct a line to Lewisham? What is required is a decision by the Government to provide money to allow London Transport to go ahead with construction.

Mr. Page: I ask the hon. Gentleman to give us a chance on this. It is a complex matter of transport. We are considering it with the utmost urgency. My right hon. Friend will give his decision as soon as possible.

Mr. Spearing: Will the hon. Gentleman give an assurance that if a grant is given it will be no less than the 75 per cent. grant given on equivalent sums for roads?

Mr. Page: I could not give such an undertaking. At the moment we are discussing the whole problem of transport and the contribution of the central Government to London Transport with the G.L.C.

House Building (Costs)

Mrs. Renée Short: asked the Secretary of State for the Environment what steps he is taking to reduce the cost of housebuilding.

Mr. Amery: The abolition of the Land Commission and the betterment levy; our policy on firm price tendering; the halving of S.E.T.; the easing of bank credit; and the reduction of corporation tax, as announced by my right hon. Friend yesterday.
These things and other Government measures to control inflation and stimulate growth should all help to contain building costs.

Mrs. Short: If the right hon. Gentleman believes that he will believe anything. None of those things will help either the building industry or the building of new homes. Is he aware that there has been a catastrophic fall in the construction industry of about 7 per cent. and that his right hon. Friend's Budget yesterday did nothing to help the building industry? Is he aware that the major requirement is a reduction in Bank Rate? Does he appreciate that that is what will bring down house prices but that nothing was done about it in the Budget? Will he make representations


to his right hon. Friend to deal with this now?

Mr. Amery: In reply to the hon. Lady's speech I can only say that the right hon. Gentleman the Leader of the Opposition said in 1964:
We shall cheapen the cost of housing by our interest rates policy.
The result was that over the period of the last Administration the average cost of a council house rose from £2,186 to £3,110.

Mr. Costain: Will the Minister completely ignore the remarks of the hon. Lady the Member for Wolverhampton, North-East (Mrs. Renée Short)? Does he realise that the facts he has announced will reduce the cost of house building? Why is he so modest? Why does he not take credit for his own mortgage proposals, which also help in this matter?

Mr. Amery: I hope that I shall never be guilty of the discourtesy of ignoring the hon. Lady's remarks, but I am bound to say that I pay a good deal more attention to what my hon. Friend has just said.

Mr. Crosland: We much enjoyed the right hon. Gentleman's humorous answer, as we always enjoy his aptitude for totally irrelevant quotations. Would he be good enough to tell the House by how much the halving of S.E.T. will reduce the cost of a house, and, secondly, will he be so good as to tell the House what measures he proposes to take to persuade house builders to pass on the reduction?

Mr. Amery: The cost of S.E.T. on a council house has been estimated by the previous Administration and by this Administration at £120. This would be half of that—£60—and that is already very substantial.

Mr. William Hamilton: Don't forget, Albert; £60 off.

London Commuter Services (Grant Aid)

Mr. Hunt: asked the Secretary of State for the Environment what further requests he has now received from the Southern Region of British Rail for him

to reconsider the withdrawal of grant-aid for commuter services.

Mr. Peyton: None, Sir.

Mr. Hunt: Is my right hon. Friend aware that the very sharp fare increases which followed the withdrawal of these subsidies caused widespread shock in my constituency? Is he satisfied that Southern Region has fully explored alternative sources of revenue, such as the more effective use of its sites for hotels, office and housing development, before increasing fares to the commuter once again?

Mr. Peyton: I can only remind my hon. Friend that where costs go up, prices must follow. I appreciate the disturbance that this has caused to many people. As to the last part of my hon. Friend's question, this is a matter for the Railways Board, not for me.

Mr. Bradley: Can the right hon. Gentleman say how many Conservative candidates in the last election, including those at Bexley and Mitcham, made it clear to commuters that the first result of their Government's railway policy would be a substantial increase in fares?

Mr. Peyton: I very much doubt whether any of my hon. Friends would have felt called on to do that since the previous Administration had already announced that they would achieve viability for the London commuter network by the end of 1972.

Mr. Ridsdale: Was not the withdrawal of grant aid a decision taken by the previous Government? Does the Minister realise that what so many people are anxious about is that this is the first burden that commuters will have to face and that the next will follow the wage increases? Will he make a statement as early as possible, since these wage increases are likely to lead to further increases in rail fares?

Mr. Peyton: Wage increases are a matter for the Railways Board and not for me. What my hon. Friend says is perfectly correct; if railway costs go up, so will the fares. The Governmen's policy is to ensure that the railways achieve viability in the London commuter network by 1973. The previous Administration had committed themselves in the 1968 White Paper to a date of 1972.

Mr. Atkinson: Is the Minister aware that the Railways Board is under the impression that it is being asked by the Government to make each separate service and route stand on its own feet and that the G.L.C. is now having some idea about a separate fares structure for each route or service in the underground system? Before this idea catches on with either the Railways Board or the G.L.C., will the Minister say that the Government would want to discourage any such idea creeping into a new fares structure for the underground and London commuters?

Mr. Peyton: Any idea that may be in the mind of the Greater London Council is not my responsibility. What I am concerned with is the amount of aid which the Government are called upon to give to a commercial operation. We have made it clear that we intend that the London commuter network should be viable by 1973.

Private Tenants (Rent Rebates)

Mr. George Cunningham: asked the Secretary of State for the Environment (1) if he is now able to estimate the number of tenants in private accommodation in the borough of Islington to whom rebates will be payable under the Government's proposed rebate scheme;

(2) what indication he has now been able to give to local authorities of the estimated total value of rebates to be paid to tenants in private accommodation under the Government's proposed scheme.

The Under-Secretary of State for the Environment (Mr. Paul Channon): The value of rent allowances and the number of tenants eligible for them will depend on the details of the national scheme of rent rebates and allowances. My right hon. Friend is still discussing these with the local authority associations.

Mr. Cunningham: Does the hon. Gentleman realise that that is exactly what he has been saying for months and that it is patently obvious that when he goes to the local authorities to discuss this idea of a scheme, the first question they must put to him is, "How much have you in mind?". Since he must have given some indication to the local authorities, will he tell the House whether he

is thinking in terms of £10 million, £50 million or £100 million for the scheme?

Mr. Channon: I can understand the hon. Member, whose Government signally failed to introduce a system to help tenants, being sore about our success in so doing. These matters are still under discussion with the local authorities and it would be quite improper to give any indication at all at this stage.

Mr. Marsh: The hon. Gentleman is under an obligation to give the House a little more information than that. Will he tell the House whether the additional funds, whatever they may be, are to be arrived at by a re-allocation of the existing amounts available, which are inadequate, or whether the Government are prepared to make additional funds available?

Mr. Channon: My right hon. Friend has already answered an earlier Question this afternoon and promised a very full statement as soon as these consultations have taken place. It would be in the interests of the House to await that.

House Building Programmes (London)

Mr. Gordon Walker: asked the Secretary of State for the Environment when he expects to complete his consultations with London boroughs and the Greater London Council regarding their future housebuilding programmes.

Mr. Russell Kerr: asked the Secretary of State for the Environment if he will now make a statement on the consultations which he has had with London boroughs concerning their housebuilding programmes.

Mr. Amery: Consultation with London housing authorities on housing matters in Greater London is a continuing process.
I propose, however, to convene a conference of these authorities to consider future policy.
This will be held as soon as practicable after the London borough elections.

Mr. Gordon Walker: Is the right hon. Gentleman aware that it would have been much wiser to have started these continuing negotiations rather earlier? Is he further aware that it is extremely important that they should result in a


speed-up of council building and bring to an end the scandalous waiting lists in such areas as Waltham Forest and many other London boroughs?

Mr. Amery: As I said, this is a continuing process which has been going on all the time. The conference is a further step. The housing situation is complicated, but the indications are that more tenders will be approved this year than last. The right hon. Gentleman, who served his political apprenticeship under Lord Morrison of Lambeth, will, I am sure, be glad to hear that Lambeth is doing extremely well under a Conservative-controlled council.

Mr. Geoffrey Finsberg: Would my right hon. Friend not agree that if in the three decades prior to 1964 the G.L.C. and the majority of the Labour-controlled inner London boroughs had done their job there would not have been this inheritance today?

Mr. Amery: My hon. Friend's comments are very much on the ball.

Mr. Leonard: Has the London Borough of Havering, which has a waiting list of more than 4,000 families, given any assurance about whether it intends to increase its present derisory programme of housing starts?

Mr. Amery: Perhaps the hon. Gentleman would table a Question on that point.

Mr. Spearing: asked the Secretary of State for the Environment what is the number of municipally-owned dwellings, for which he has given loan sanction, likely to be completed in the London Borough of Ealing in 1971.

Mr. Channon: The hon. Member should apply to the Council for this information, since the day-to-day management of the house-building programme, on which the rate of completion of dwellings depends, is in their hands.

Mr. Spearing: I am mystified by that reply because according to returns by the hon. Gentleman's own Department there were 774 starts in the London Borough of Ealing in 1968 and only 22 last year. Is the hon. Gentleman aware that, because of this, priority medical cases in the London Borough of Ealing cannot be

rehoused? Would he not agree that it is a typical example of Conservative Government?

Mr. Channon: On the contrary. What the hon. Member fails to take into account is that last year nearly 800 dwellings were completed, and I am glad to tell the House that there is a programme for approximately 1,000 dwellings in each year, 1971 and 1972.

Mr. Weitzman: asked the Secretary of State for the Environment what proposals he has received from the London Borough of Hackney as to the number of houses to be built in the years 1971, 1972 and 1973.

Mr. Clinton Davis: asked the Secretary of State for the Environment what response he has received to requests made by him to the London Borough of Hackney for an accelerated housing programme.

Mr. Channon: The future level of local building by the borough has already been discussed at two meetings with the council and is still under discussion.

Mr. Weitzman: Is the Minister aware that there has been a deliberate run-down in the housing programme prepared by the Labour council in 1961 for a period of 10 years and that no provision has been made for the years following 1973, although there is a very large housing list? Would he not regard that as scandalous conduct on the part of the borough council?

Mr. Channon: On the contrary, I can tell the hon. Member that in the three years of Conservative control on the council there were 3,000 completions compared with 1,400 when the Labour Party was in power.

Mr. Clinton Davis: Is the hon. Member aware that next year completions will be 800, the following year 600, and that there is no adequate programme for the years to follow, and nothing like a 10-year plan? Is he aware that there has been a deliberate refusal on the part of the local Conservative authority to implement compulsory purchase orders—in fact there is almost a conspiracy by Hackney? Is he also aware of the fact—[HON. MEMBERS: "Too long."]—that the Conservative council is engaged in the disposal of


land which has been earmarked for municipal development and that this is adding to the burdens upon a long-suffering public?

Mr. Channon: I can well understand the hon. Member seeking to clutch at straws in this matter. The facts are these. I have already given the number of completions. I will now give the figures for starts. In 1965 during the Labour administration there were promised to be 1,800 a year. Under the Conservatives, in three years, to 1970, they are over 3,000.

Mr. Atkinson: asked the Secretary of State for the Environment if he will state those London boroughs with whom he or his officials have had consultations regarding their future house-building programmes, and those with whom consultations have yet to be held.

Mr. Barnes: asked the Secretary of State for the Environment with which London boroughs he has had consultations regarding their house-building programmes.

Mr. Channon: Consultations about the house-building programme are a regular and continuing feature of the Department's relationship with the London boroughs. In the current round consultations have been held with all boroughs except Wandsworth, with whom a meeting has been arranged to take place shortly, and Richmond.

Mr. Atkinson: Now that the Minister's right hon. Friend has announced that he is to convene a meeting after 13th May, will he accept that on 13th May the majority of the London boroughs will return a majority of Labour councillors and that then the total commitment of London boroughs will be to build not fewer than 250,000 houses during the next 10 years? Will he now tell the House on behalf of the Conservative Party that it will give a guarantee to Londoners that in the next 10 years it will build not fewer than 250,000 houses for Londoners?

Mr. Channon: What I can tell the House is that for more than 30 years the Labour Party was in control of London and we can see the ghastly results.

Mr. Barnes: Is it not very unsatisfactory to have borough elections taking place, especially in London, which is very important, with the uncertainty about what the house-building programme will be, according to how the right hon, Gentleman defines stress areas or how he does not, and with tenants having no idea of how large the housing list may be as a result of Government policy?

Mr. Channon: I can see that it is very unsatisfactory to the hon. Member's party to note from the tenders that there are likely to be more completions this year than last year.

Mr. Freeson: The hon. Gentleman must know that that answer is no great encouragement. Will he recall that in London the rate of housing reached a level of about 30,000 about three years ago in one year but has now dropped over these last years—[Interruption.] That is right. Since the Conservatives won control of the town halls in May, 1968, the number has dropped. [Interruption.] The hon. Member should act like a Minister. I assure hon. Members opposite that I know the subject a little better than the Minister does.

Mr. Speaker: Order. Will the hon. Gentleman put a supplementary question?

Mr. Freeson: I shall be very glad to do so if the Minister will stop interrupting. Is the Minister aware that since the Conservatives returned to power and took over control at the town halls in May, 1968, in so many London boroughs and at the G.L.C. there has been a drop from 30,000 housing starts in 1967 to 18,000 currently? What does the Minister intend to do to get the housing starts up to at least 30,000 a year as soon as possible?

Mr. Channon: I can well understand the Labour Party's sense of guilt about the situation which London housing is in. [HON. MEMBERS: "Answer"] I will indeed answer the question. The facts are that in 1970 completions—[HON. MEMBERS: "Starts."] I notice that hon. Members opposite are very sensitive about completions. I can well understand that. In 1970 completions were nearly 4,000 more than they were in 1968 and they very much look like being more this year.

Trees (Preservation Orders)

Mr. David James: asked the Secretary of State for the Environment whether he will design and make available a metal plaque to be affixed to all trees that are the subjects of a preservation order.

The Under-Secretary of State for the Environment (Mr. Michael Heseltine): No, Sir.

Mr. James: As thousands of specimen trees are needlessly cut down every year, why must we have an almost inane "No" to a perfectly reasonable proposition to make people more conscious of the need to preserve trees?

Mr. Heseltine: I do not think that the fixing of plaques to tree preservation order trees would help to preserve any trees. There are adequate powers to deal with anybody molesting trees on which there are preservation orders.

Mr. Mackie: If the hon. Gentleman should by any chance take his hon. Friend's advice, will he ensure that the plaques are fixed in such a way that the nail does not affect the ultimate cutting down of the tree when the wood is destroyed?

Mr. Heseltine: I agree that the fixing of plaques and signs to public property in no way guarantees protection of public property.

Mr. Robert Cooke: Having rejected the idea of hanging labels on trees, will my hon. Friend encourage the planting of more trees for future generations to enjoy—and I do not mean the proliferation of Christmas trees across the landscape by the Forestry Commission?

Mr. Heseltine: A very large number of trees are planted every year for amenity reasons as part of the Department's road building programme.

Transport System (Price Increases)

Mr. William Hamilton: asked the Secretary of State for the Environment what steps he has taken to prevent or reduce prices increases within the transport system for which he has responsibility.

Mr. Peyton: I encourage those operators for whom I have responsibilities to

improve their efficiency and hold down costs, but prices are bound to follow costs upwards, particularly when wages rise faster than productivity.

Mr. Hamilton: Which is the more serious problem—increasing commuters' fares, to which the hon. Member for Bromley (Mr. Hunt) referred, increased living standards for railwaymen, or the elimination of subsidies for the commuters? Since the transport system is a public sector element, is not this one of the fields in which the Prime Minister promised to reduce prices at a stroke?

Mr. Peyton: The Prime Minister's promises are the more difficult of performance because of the obstacles left in the way by the last Administration.

Sir G. Nabarro: While thoroughly endorsing what my right hon. Friend said in his answer, will he bear in mind that, as the Worcestershire countryside and other rural areas are now nearly denuded of public road transport save only for an occasional heavy, empty, lumbering vehicle polluting the atmosphere, the answer is for him to reform the system of traffic commissioners to enable tidy, compact, speedy, mini-buses with cheap fares to run everywhere?

Mr. Peyton: I agree with my hon. Friend, but the bus industry is not the only industry which poses very severe problems for me. The legacy left by the last Administration—

Sir G. Nabarro: Rub it in to them, John!

Mr. Peyton: —was one of considerable losses and mounting costs due to legislation, the intentions of which were pious but the reality of which was absent.

Mr. Speaker: I should like mini supplementary questions and mini-answers.

Sports Facilities

Mr. Hunt: asked the Secretary of State for the Environment what steps have been taken to make sports facilities at present in the exclusive use of particular sections of the community more widely available for public recreation.

The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): It is our policy to ensure that existing and


future sports facilities, whether at schools and colleges, at industrial plants or at governmental, including Armed Services, establishments, should be available, wherever possible, to the general public.

Mr. Hunt: Will my hon. Friend ensure that his very welcome reply is brought to the attention particularly of local authorities? Is he aware that many ratepayers, having paid very large sums of money for the provision of recreational and sports facilities in schools and colleges, resent the fact that those facilities are denied them for long periods during the evenings and school holidays?

Mr. Griffiths: Yes, Sir. This policy is being brought to the attention of all local authorities, including local education authorities. However, there are more than 100 dual-use projects in co-operation with local education authorities in the pipeline.

Mr. Edwin Wainwright: Will the hon. Gentleman look at this problem more practically than he has done in the past? Will he take note of the joint schemes between local authorities and education authorities, which abound throughout the country, wanting financial help from his Department? Will he ensure that a greater contribution is made by his Department towards the provision of swimming pools and playing fields?

Mr. Griffiths: The question of the provision of local facilities is, in the first instance, for the local authorities. Where it is possible to help them, they will be helped. But I am glad that the present Government have been able to make available to the public Armed Services facilities as a result of improving the insurance arrangements, thereby helping many people at local level.

Mr. Denis Howell: Is the hon. Gentleman aware that both sides of the House agree with his policy and that it is monstrous that schools costing about £750,000 are open for only 35 weeks of the year and about five hours a day? Is he further aware that not a little progress has been made since we issued the circular, which I know the Minister supports? Will the hon. Gentleman ask his Regional Sports Council to carry out a detailed survey of school buildings and similar community buildings not yet fully available to the public for sports use?

Mr. Griffiths: I will look into that point. But considerable progress is being achieved, particularly when new schools are being constructed.

Agrément Board

Mr. Costain: asked the Secretary of State for the Environment what proportion of testing work for the Agrément Board on materials or components submitted for appraisal was carried out by the Building Research Station in 1970.

Mr. Channon: About 85 per cent.

Mr. Costain: Is my hon. Friend aware that I tabled this Question to draw his attention to the anomaly of having two organisations doing similar work? Will he look into this question and see what savings can be made as a result of coordination or amalgamation?

Mr. Channon: I will bear in mind and carefully study what my hon. Friend said.

Building Research Station

Mr. Costain: asked the Secretary of State for the Environment how many inquiries have been dealt with by the Building Research Station since the setting up of its technical inquiry service in 1970; what fee income has been received by the station; and to what purpose that income has been devoted.

Mr. Peter Walker: The B.R.S. Advisory Service dealt with nearly 17,000 inquiries in its first nine months, to the end of January last. The fee income so far has been £26,000, which has passed to the Exchequer.

Mr. Costain: I thank my right hon. Friend for that answer. Is he satisfied that this organisation is a commercially viable entity and that the work it is doing is benefiting the building industry?

Mr. Walker: It is certainly benefiting the building industry. As yet it is not a commercial concern since it has only just started operations and has had all the initial expenditure of being set up. The matter is under review and I have appointed a new director-general of research who will investigate all the research facilities of the Department.

Joint Tyneside Sewerage Treatment and Disposal Scheme

Mr. Blenkinsop: asked the Secretary of State for the Environment whether he has now authorised the Joint Tyneside Sewerage Treatment and Disposal Scheme.

Mr. Peter Walker: As the hon. Member will now be aware, on 9th March I agreed to a capital spending programme of some £30 million to clean up the Tyne, and to an immediate start on the scheme for the south western part of the Tyneside Joint Sewerage Board's area. Since then, with a view to approval of other works, my Department has begun discussions with the Board on technical questions arising from the investigation of the Board's scheme—including the question of the method of disposal to be adopted for the rest of the Board's area.

Mr. Blenkinsop: I welcome the right hon. Gentleman's statement that, after a considerable delay, a start is to be made on this major scheme. Why has the long-term technical investigation been set aside for what we regard as a retrograde proposal that great masses of untreated sewage should be pumped out to sea on the north side of the river?

Mr. Walker: It will not be completely untreated sewage. I am advised that technically, from the point of view of pollution of the river and the coast, the suggestion which we have made is the best. The sewerage board thinks otherwise. Therefore, I thought that the best thing to do was to enable the experts of both sides to get together quickly and to come to a conclusion. They got together on 25th March, and as soon as they decide the best scheme to deal with pollution I shall approve it.

Dame Irene Ward: I thank my right hon. Friend for his last statement and for receiving the representations which I made on behalf of my constituents who were frightened about the flow-back on the beaches. Can he say how long he thinks the experts on both sides will take to resolve this question, which is very important for the whole of Tyneside and all our beaches?

Mr. Walker: I have instructed the officials in my Department to be as

speedy as possible. I am grateful for my hon. Friend's remarks. I can assure her that the final decision will be taken on the basis of which system causes the least pollution to her constituency.

Mr. Bob Brown: I am grateful for the original reply and for the fact that the right hon. Gentleman has committed his Department to look at the secondary problem, but would he now give an undertaking that the best solution is the solution which has been arrived at after many years of filth on Tyneside and that the best solution, not the cheapest, will be the one for which he goes?

Mr. Walker: Certainly the best, not necessarily the cheapest.

Dame Irene Ward: Hon. Members should congratulate the Minister.

Mr. R. W. Elliott: May I also thank the Minister for his initiative in this regard? This is a problem which has been with us for far too long. Is my right hon. Friend aware that there is considerable professional support for the Howden disposal scheme?

Mr. Walker: I am anxious to make the best technical assessment I can and then to get on with the job.

Central Housing Authority (London)

Mr. John Fraser: asked the Secretary of State for the Environment if he will introduce legislation to establish a central housing authority for Greater London.

Mr. Amery: No, Sir.

Mr. Fraser: Is the Minister aware that cheap cracks from the Government Front Bench do not help the housing programme and that the number of starts bears no relationship to the housing need in London? Will he announce his intention to step in—in place of failing authorities in London, no matter which they may be—to ensure that houses get built, because housing lists are already far too long?

Mr. Amery: The hon. Gentleman is a good judge of cheap cracks. The record of his own borough, which has built more than 4,000 houses in the last five years and which plans to build nearly 6,000 more by 1974, does not suggest that the boroughs are unable to tackle the problem successfully.

Mr. Kenneth Baker: Is my right hon. Friend aware that this year the G.L.C. will have over 16,000 new lettings, which is an increase of 36 per cent. over the last year in which Labour controlled the G.L.C.?

Mr. Amery: My hon. Friend is right. I am satisfied that the G.L.C., the boroughs, private enterprise and the housing associations between them form the best combination for tackling this serious problem.

Mrs. Renée Short: Is the Minister aware that the fall in the number of housing starts is not confined to Greater London but is being experienced in every large town and city? Will he consider the recommendation contained in the 1968 Report of the Estimates Committee for the setting up of a house building corporation or association to build houses in all parts of the country where the local authorities are either unwilling or unable to do so for whatever reason? Further, may I remind the Minister—[HON. MEMBERS: "Too long."] Hon. Members opposite are very impatient today. I remind the Minister that that was an all-party Committee and not a Committee composed only of Labour Members.

Mr. Amery: I take the hon. Lady's point. The Question is about London. I will gladly receive any representations from her about any other areas which she thinks should be considered separately.

Slum Clearance Programme (London)

Mr. John Fraser: asked the Secretary of State for the Environment what steps he is taking to encourage an increase in the slum clearance programme in London.

Mr. Amery: Our proposals for the reform of housing finance will provide greater incentives for local authorities to tackle slum clearance and increased resources with which to do so. In London the rate of progress in slum clearance is of course very dependent on the overall rate at which new housing can be provided. Here I look to local authorities, overspill arrangements, and the private sector to play their part.

Mr. Fraser: In the light of his previous reply, can the Minister say why in Lambeth no houses were demolished in slum-

clearance areas in the first nine months of 1970, why in five other London boroughs no houses were demolished in slum-clearance areas, and why there are derisory totals in many parts of London?

Mr. Amery: The housing shortage is so pressing in Lambeth that the Lambeth authority has rightly been concentrating on overspill arrangements. When I visited Lambeth three days ago I was impressed by the arrangements it was making with Peterborough to get people from Lambeth rehoused in Peterborough, often in much better houses and much more cheaply than they were in Lambeth.

Mr. Gorst: Does my right hon. Friend agree that this urgent and important matter will be much more likely to receive urgent and successful treatment from a Conservative Government because of the economic policies which are being pursued and which have recently been announced? Would my right hon. Friend care to spell them out in detail for the sake of hon. Members opposite?

Mr. Amery: I agree with my hon. Friend. Indeed, I find it hard to think of any problem which would not be better solved by a Conservative than by a Labour Government.

Mr. Douglas-Mann: Is not the greatest problem the lack of land in London? Will the Minister take steps to ensure that local authorities acquire such land, particularly public utility land, as does become available and do not refuse land in rich areas as the Kensington Borough Council did in neglecting the Campden Hill Water Works site?

Mr. Amery: As I have tried to explain in answer to earlier Questions, I have one meeting this week and another after the local elections with the London authorities to discuss all these problems and I hope that these will lead to action to solve a problem which has been left unsolved for far too long.

North Cross Route Motorway

Mr. Stallard: asked the Secretary of State for the Environment if he will make a statement about the latest proposals concerning the North Cross route motorway, in particular its effect on the London Borough of Camden.

Mr. Graham Page: No, Sir. Proposals for this route are the responsibility of the Greater London Council as highway authority.

Mr. Stallard: Will the Minister bear in mind that there is considerable unrest and anxiety among thousands of residents and traders all along this route about the proposals? Is the hon. Gentleman aware that it has been estimated that, if these proposals are accepted, together with council building programmes, at least 30,000 jobs will disappear in the London borough of Camden alone? Will the Minister take this into consideration and advise his friends on the G.L.C. of these facts?

Mr. Page: It is not for my right hon. Friend to take this matter into consideration at this stage. It is part of the G.L.C.'s proposed primary road network and is therefore being examined at the current inquiry into the Greater London development plan.

Mr. Geoffrey Finsberg: Will my hon. Friend accept that on this matter at least both political parties in the London Borough of Camden are united in not wanting this montrous route?

Mr. Page: It has to be considered by the inquiry and it would be wrong for my right hon. Friend to say anything on the merits of the proposal at this stage.

Rented Accommodation (Camden)

Mr. Stallard: asked the Secretary of State for the Environment what reduction in rented accommodation there was in the London Borough of Camden in the period 1964 to 1970, year by year.

Mr. Channon: I regret that this information is not available. Table 9, pages 48 and 49 in the 1966 Sample Census, Greater London volume, gives the number of dwellings by tenure for each London borough.

Mr. Stallard: I thank the Under-Secretary for that scant information. Is the hon. Gentleman aware that rented accommodation in inner London, and certainly in the London Borough of Camden, is seriously declining and that this is causing extreme hardship to many

people, especially young married couples, who have to move further and further from London to find somewhere they can afford to live and then pay grossly exaggerated fares to get to work in the London area? Will the hon. Gentleman take account of all these factors and come up with a suggestion for improving the situation?

Mr. Channon: I agree that the reduction of privately rented accommodation is a serious matter, not only in Camden. I therefore hope to have the hon. Gentleman's support for the announcement that my right hon Friend has made about the implementation of the Report of the Francis Committee.

Hackney

Mr. Clinton Davis: asked the Secretary of State for the Environment if he will pay an official visit to the London Borough of Hackney.

Mr. Peter Walker: I have at present no plans to do so.

Mr. Davis: Is the Secretary of State aware that there is a grotesquely inadequate public transport system in Hackney, that bus routes are being taken off, and that the proposed underground railway system is unlikely to be implemented for about 20 years? Should not the Ministry institute an inquiry having regard to the needs of this very large London borough?

Mr. Walker: On all these matters my Department is in close liaison with the borough concerned.

PERSONAL STATEMENT

Mr. Lawson: With permission, Mr. Speaker, I wish to make a personal statement.
Yesterday during Questions to the Prime Minister, I asserted that several members of the Scottish Economic Council had left in anger during a meeting with the Prime Minister. I have subsequently learned that I was mistaken. Those members certainly showed their anger, but I understand that nobody left the meeting during the Prime Minister's speech. For that reason, Mr. Speaker,


I wish to express my regret at having made that statement.

Mr. Speaker: I am sure the House will be obliged to the hon. Gentleman.

SOCIAL SECURITY (BENEFITS AND CONTRIBUTIONS)

The Secretary of State for Social Services (Sir Keith Joseph): With permission Mr. Speaker, I should like to make a statement about the uprating of social security benefits. My right hon. Friend the Chancellor of the Exchequer has already announced the main increases in benefit and contribution rates to take effect in the week beginning 20th September. Associated benefits will go up in proportion to the main increases. Shortly after the Easter Adjournment I shall be presenting a White Paper to the House with a Bill and the Government Actuary's Report and laying Instruments for the war pensions and supplementary benefits improvements.
I am circulating fuller details of the new rates of benefits and contributions in the OFFICIAL REPORT. It may, however, be convenient to state now that for the £18 a week earner there will be no increase in contributions; for the £20 a week earner the increase will be 3p a week; the £30 a week earner will pay an extra 15p a week; and a person earning £42 a week or more will pay an extra 65p a week.
There are certain new selective improvements which I now wish to explain to the House. I am making copies of my Statement available in the Vote Office.

The Earnings Rule and Increments for Deferred Retirement

First, the earnings rule. We propose that earnings up to £9·50 instead of £7·50 will have no effect on retirement pensions; on higher earnings the present tapering arrangements will apply. The increments payable for deferred retirement will rise from 5p to 6p for nine contributions paid.

Measures for the very Elderly

The old person's pension provided under the National Insurance Act, 1970,

for people who could not become insured in 1948 will rise from £3 for a single person and £1·85 for a wife to £3·60 and £2·20 respectively. Similar pensions, at the new rate, will be paid subject to a residence test to all persons over 80, who failed to qualify for a pension or who qualify for one at a lower rate, and to those who subsequently attain that age.

We are concerned about the very old. We propose to increase the uprated pensions of all persons over 80, including the recipients of old person's pensions, by an addition of 25p. Thus, with full standard pension, a single pensioner will get £6·25 and a married couple will get £9·95 if one of the couple is over 80 and £10·20 if both are over 80. There are some 1·2 million people over 80, of whom about two-thirds will receive the increase. The remainder are supplementary pensioners, and there will be an increase of 25p in the long-term addition where the pensioner or his dependant is over 80.

Main War Pensions and Industrial Injuries Benefits

The war and industrial disablement pension for 100 per cent. assessment goes up from £8·40 to £10, and pro rata with lower assessments; the normal maximum of constant attendance allowance goes up from £3·30 to £4. Standard war widow's pension will be increased from £6·50 to £7·80 and industrial injuries widow's pensions from £5·55 to £6·55.

A pension will be paid regardless of the cause of death to the widows of all war and industrial pensioners who were receiving the normal maximum or higher constant attendance allowance. This will help about 1,500 women who have devotedly nursed their gravely disabled husbands.

War Pensions Preferential Allowances

Certain war pensions preferential allowances which have not been increased since 1967 will be raised by a third—namely comforts allowance, clothing allowance, and age allowance. Severe disablement occupational allowance, unchanged since its introduction in 1961, will be doubled to £2 and we shall institute an age allowance at 50p a week for elderly war widows between the age of 65 and 70.

Supplementary Benefits

The scale rates for supplementary benefits are to be increased from £8·50 to £9·45 for a married couple and from £5·20 to £5·80 for a person living alone. Children's rates will go up pro rata and, with the agreement of the Supplementary Benefits Commission, there will be selective additional increases for those aged from 13 to 20.

Restrictions on Unemployment Benefit for Occupational Pensioners and Optional Contributions for Non-Employed Persons over 60

There has been concern that some retired people with substantial occupational pensions claim unemployment benefit and contribution credits although they really have left the active employment field. But I know that the pensioners themselves have strong feelings about their liability to pay contributions when unemployed and not entitled to credits.

I propose three measures for occupational pensioners over 60. First those with pensions of £30 a week or more will not get unemployment benefit or credits unless they first satisfy a test of further work. Second, benefit will be reduced on a sliding scale if the pension is more than £18 a week. Third, everyone over 60 will be able to decide voluntarily whether or not to continue to contribute towards obtaining the full standard retirement pension. Some 5,000 to 6,000 people will be affected by the restrictions, but the contribution concession will go wider.

Measures for the Chronic Sick

We propose a substantial package of improvements for a neglected group, the chronic sick, to lift them above the basic benefits of the short term sick when their earnings related supplement ceases after six months of incapacity. At this point they will become invalidity pensioners, entitled to an invalidity allowance if incapacity began more than 5 years before pensionable age as well as the full standard rate of benefit. We shall start at a modest level with three rates: £1 if incapacity began before the age of 35; 60p if it began before 45; 30p if it began before 55 for women and 60 for men. We are deliberately favouring those who fall

chronically sick young, because they will not have had the same opportunities to build up personal savings or pension rights that an older man had.

The allowance will be paid to the existing chronic sick who are under pension age at the appropriate rate. Well over three-quarters of the existing 400,000 chronic sick are expected to qualify.

In these cases of prolonged incapacity the wife may become the main breadwinner. We therefore propose to apply to her earnings the tapered retirement pensions earnings rule, eased as I have already described to £9·50, instead of the all-or-nothing rule which at present extinguishes the increase paid for her if her earnings exceed £3·10.

The chronic sickness of the father imposes particular difficulties where there are dependent children. We propose to pay the higher rate of children's allowances at present payable only for the children of widows—£2·95 including family allowance after the uprating—for the children of invalidity pensioners, instead of £1·55 as it is now.

At retirement age, invalidity allowances will be carried over to retirement pensions as lifelong benefits, and they will be payable to unemployable pensioners under the war pensions and industrial injuries scheme. All these categories of pensioners will also qualify for the family benefits which go with invalidity pension.

The House may be interested in an example of the changes. The national insurance benefit income of a man who fell chronically sick at 30, with 2 children and a wife who is not working, is today £11·20 including family allowances, and would become £13·40 after the uprating. Under the new arrangements it will be £16·60, an increase of nearly 50 per cent.

Finally, we propose to increase the rate of attendance allowance, due to start on 6th December for the very severely disabled, from £4 to £4·80.

All these proposals, including the main pension increases, will cost about £560 million in a full year. There are still gaps that need to be filled. We have this time put the chronic sick and the very old as our priorities. I am sure that when the House has had the chance to study our proposals in detail they will be seen as a healthy combination of the universal and the selective.

Mrs. Shirley Williams: It will indeed be useful to have rather more time to study these very detailed proposals. I have had exactly 10 minutes to look at this very long statement.
I think that the right hon. Gentleman's hon. Friends and colleagues have been very much taken in by the appearance of a package which is totally inadequate. I should like to tell the House the real value of the increases which the right hon. Gentleman is making. On 20th September, 1971, when pensions are increased and all the benefits which the right hon. Gentleman has announced today are in line with the increase in pensions, the real value of the increase will be exactly 18p for a single pensioner and 30p for a married couple, and it will take approximately three or four months for that total sum to be eradicated by increases in prices.
I should like to ask the right hon. Gentleman the following questions. First, will he kindly justify the introduction of earnings-related contributions to the very great extent he has made, including one which, at £40, totally eradicates the benefit of the child allowance, when he is not introducing earnings-related benefits at all?
Secondly, will he tell us what will be the effects on liquid funds for industry of an increase of £250 million on contributions of employers and what effect it will have on the intention of the Budget to increase economic growth?
Thirdly, has the right hon. Gentleman made an assessment of the increase in unemployment benefits as a result of the increase in unemployment which the Government are doing nothing to reduce?
Finally, are we correct in believing that those pensioners over 80, for whom another increase has just been announced, which we welcome, will once again find that their supplementary benefit allowances are withdrawn and that consequently many of them will be no better off at the end of the day than at the present time?

Sir K. Joseph: I am sorry that the hon. Lady has had only 10 minutes to study the statement. Certainly she should have had half an hour. I apologise.
I cannot see how the hon. Lady can predict the real value of the pension next

September. I can assure the House with confidence that the pension will be an improvement in real terms, which is more than the hon. Lady's Government produced in 1969. There will be an earnings-related supplement to short-term benefits payable at 15 per cent. for the tranche of income between £30 and £42, but it will not start until the benefit year beginning 1973.
As for the liquid funds of industry, it was always anticipated by those who pressed for a pension increase that employers would bear their fair share of the cost. It lies ill for the spokesman for a party which imposed S.E.T. with the forced loan on industry to criticise that.
It is not possible to predict the cost of unemployment benefit, but the Government Actuary's Report will set the parameters behind these assumptions.
The hon. Lady obviously did not, in the short time she had to study the statement, take in that the over-80 additional pension will be carried through to supplementary benefit by an increase of 25p in the long-term addition.

Mr. Boyd-Carpenter: Will my right hon. Friend tell the House—I do not think that he did—what will be the increase in the presumably flat-rate contribution payable by the self-employed? Is he aware that the humane selectivity of a package which gives priority to the very old and the long-term sick will appeal to social thinking people inside and outside the House and in all parties?

Sir K. Joseph: I am grateful to my right hon. Friend, who pioneered much in this sphere. The answer to his question is 26p.

Mr. Crossman: First, is the right hon. Gentleman convinced that the general increase will be sufficient to cover over two years the likely increase in the cost of living?
Secondly, I appreciate what the right hon. Gentleman has done about the disability pensions. It is a beginning, and I welcome it very much indeed.
Thirdly, the right hon. Gentleman has not mentioned any increase in the graduated benefit; he has mentioned only an increase in the graduated contribution. Does this mean that we have now moved


from a contributory system in which benefit is related to contribution to a social security tax system in which we impose graduated contributions and receive only flat-rate benefits? Is that the way we are really moving?

Sir K. Joseph: I am grateful to the right hon. Gentleman for his welcome to the treatment of the chronic sick. The right hon. Gentleman is wrong about graduated benefit. The graduated pension continues as now; that is, 2½p. for each £7–50, I think, of contribution.

Mr. Crossman: When we put it up in 1969 we related the increase in contribution to an increase in benefit as well. I think what the right hon. Gentleman now says is that the bricks remain the same value and we pay more and, therefore, the graduated element which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carptener) introduced is being flattened out on the benefits side and swollen on the contribution side.

Sir K. Joseph: That is a fair statement. We are moving towards the declared purpose of an earnings-related contribution. The real value of the pension will, I am confident, be better after the up-rating than when the pension was last increased in 1969.

Dame Irene Ward: I should like to express the very grateful thanks of everybody for the speed with which my right hon. Friend has announced this wonderful treatment. I should also like to express my great pleasure at the team which operates from the Department of Health and Social Security. I suggest that my right hon. Friend pays no attention to the monstrous regiment of men and women who cavil and criticise a scheme which they had neither the money nor the courage to bring in.

Sir K. Joseph: I only hope that my hon. Friends and I will continue to earn my hon. Friend's most welcome commendation.

Mr. Rhodes: Is the right hon. Gentleman aware that today's insurance claw-back after yesterday's taxation hand-out will make many people feel today very much like the morning after the night before?
Since the right hon. Gentleman has expressed such close sympathy for the

chronic sick and for the elderly, will he now assure the House that, in the course of the massive prescription charges which he is now planning, he will exempt women between the ages of 60 and 65 and those in need of permanent medication?

Sir K. Joseph: I shall not give such a guarantee. The hon. Gentleman and the House will be aware that every penny which is being raised in contribution from the working generation, and more, because of the Exchequer contribution, will be paid out to the parents of the working generation in increased pensions.

Mr. Tapsell: Will my right hon. Friend accept that there will be widespread respect for a Government which are not only making our society more efficient, but more compassionate?
I should like to ask about the position of the self-employed. As we move further towards a wage-related contribution to National Insurance, is there not a danger that the self-employed will become relatively more badly positioned in relation to the employed? Might there not be a case for increasing the Exchequer contribution for the self-employed?

Sir K. Joseph: I do not think that my hon. Friend has a case there, but I will look at what he has said. I think the whole House wants to see the chronic sick better treated, and this is the first step in a direction which I should have thought both sides would have welcomed.

Mr. Orme: Is the Minister aware that the people who will have to carry the burden of the contributions will be the highly skilled section of the working population, the artisans and craftsmen, in the wage bracket of between £25 and £40 a week, in addition to the other burdens imposed by the mini-Budget which start tomorrow? Why are the Government not making a larger Exchequer contribution so that the whole community, including those who are being exempted from surtax, can pay towards these contributions?

Sir K. Joseph: The Exchequer contribution has been restored to the full 18 per cent. which has been habitual. The increases are proportionately much less in the bracket to which the hon. Gentleman refers—for a benefit increase of precisely double—than they were in 1969 under his Government. The low paid


are paying no extra, since there is no increase in the flat rate.

Sir B. Rhys Williams: I congratulate my right hon. Friend on the wisdom with which he proposes to distribute the sum of £560 million a year. Has he prepared an estimate of the number of people who as a result of these measures will be saved from the need for applying for supplementary benefit?

Sir K. Joseph: It is not nearly as large a figure as I would wish. A number will be shifted, particularly the chronic sick, from partial dependence on means-tested benefit to full dependence on insurance benefit, but the numbers who will be taken off supplementary benefit altogether will, I fear, be only scores of thousands.

Mr. Alfred Morris: Does the right hon. Gentleman agree that the heaviest onset of chronic sickness is among men between 45 and 60 and that the invalidity allowance of 30p is, therefore, inadequate? Has the right hon. Gentleman seen the publication of the Disablement Income Group comparing the financial

MAIN INCREASED NATIONAL INSURANCE BENEFIT RATES



Proposed Weekly Rate
Existing Rate


Standard rate of unemployment and sickness benefits, maternity and widowed mother's allowances and invalidity, widows and retirement pensions
£
£


Single person
6·00
5·00


Wife or other adult dependant
3·70
3·10


Unemployment or sickness benefit


Married woman (normal rate)
4·20
3·50


Persons under 18
3·30
2·75


Widow's allowance (first 26 weeks of widowhood)
8·40
7·00


Widow's basic pension
1·80
1·50


Invalidity allowance payable with invalidity pension, when in-capacity began before age:


35
1·00
New Benefit


45
0·60


60 for men or 55 for women
0·30


Attendance allowance
4·80
4·00


Old persons' pensions


Wife
2·20
1·85


Any other person
3·60
3·00


Age addition to retirement pension
0·25
New Benefit


Guardian's allowance
2·95
2·45


Child's special allowance and increases for children of widows, invalidity and retirement pensioners*


First child
2·95
2·45


Second child†
2·05
1·55


Any other child†
1·95
1·45


Increases for children of all other beneficiaries


First child
1·85
1·55


Second child†
0·95
0·65


Any other child†
0·85
0·55


*At present the chronic sick, who will become invalidity pensioners, and retirement pensioners receive the lower rates of increase for their children.


† Family allowances are payable for second and subsequent children.

help we give to the chronic sick and severely disabled with what is made available in neighbouring countries, and, against that background, does he think his proposal is adequate? Finally, what does the right hon. Gentleman propose to do about easing the earnings rule to help the wife of the man who has been sick and off work for more than six months?

Sir K. Joseph: I did say that the rates with which we are starting are modest, but they are a beginning. They are not yet as good as they are in the countries analysed by the D.I.G. pamphlet, which I have read, but it is not for the Labour Party to rebuke us for this, since in six years in office they did precisely nothing about the chronic sick. Secondly, the dependent wife of a chronic sick man will be enabled to earn fully without losing her £3.10 dependency benefit which up to now has been withdrawn if she earned a penny a week over that.

Mr. Speaker: Order. I am advised that these matters may be further pursued during the debate on the Budget.

Following is the information:

MAIN INCREASED INDUSTRIAL INJURIES BENEFIT RATES



Proposed Weekly Rate
Existing Present Rate



£
£


Injury benefit
8·75*
7·75


Disablement benefit (100 per cent, assessment)
10·00*
8·40


Unemployability supplement
6·00†
5·00


Special hardship allowance (maximum)
4·00
3·35


Constant attendance allowance (normal maximum)
4·00
3·30


Exceptionally severe disablement allowance
4·00
3·00


Industrial death benefit:


Widow's pension during first 26 weeks of widowhood
8·40
7·00


Widow's pension now payable at £5·55 rate
6·55
5·55


Widow's pension now payable at £1·50 rate
1·80
1·50


Rates for dependant wives and children are the same as for comparable National Insurance benefit.


* Increases will also be made in the juvenile rates.


† Invalidity allowances and the higher rate of children's allowances will be paid as to invalidity pensioners—see National Insurance Table.

MAIN INCREASED WAR PENSIONS RATES


All ranks receive the same increases, officer's rates being expressed in pounds per annum.


PART I—DISABLEMENT BENEFITS




Proposed Weekly Rate
Existing Rate




£
£


Disablement pension for private at 100 per cent, rate
…
10·00
8·40


Unemployability allowances*


Personal allowance
…
6·55
5·45


Increase or further increase for wife
…
3·20
2·60


Increase for adult dependant
…
3·70
3·10


Comforts allowance


Higher rate
…
1·70
1·25


Lower rate
…
0·85
0·63


Allowance for lowered standard of occupation (maximum)
…
4·00
3·35


Constant attendance allowance


Special maximum
…
8·00
6·60


Special intermediate
…
6·00
4·95


Normal maximum
…
4·00
3·30


Three-quarter day
…
3·00
2·50


Half and quarter day
…
2·00
1·65


Clothing allowance (annual rate)


Highest rate
…
19·00
14·00


Intermediate rate
…
12·00
9·00


Lowest rate
…
7·00
5·25


Age allowance with assessments of


40 and 50 per cent.
…
0·50
0·38


60 and 70 per cent.
…
0·70
0·50


80 and 90 per cent.
…
1·00
0·75


100 per cent.
…
1·40
1·00


Exceptionally severe disablement allowance
…
4·00
3·00


Severe disablement occupational allowance
…
2·00
1·00


* Invalidity allowances and the higher rate of children's allowances will be paid as to invalidity pensioners—see National Insurance Table.

PART II—DEATH BENEFITS



…
Proposed Weekly Rate
Existing Rate


Widows pensions
…
£
£


Standard rate
…
7·80
6·50


Basic rate
…
1·80
1·50


Rent allowance
…
3·00
2·50


Age allowance for elderly widows


Between age 65 and 70
…
0·50
New benefit


Over age 70
…
1·00
0·75


Widowers pensions
…
7·80
6·50


Widows children


Eldest child
…
3·15
2·65


Other children with family allowance
…
2·65
2·15


Other children without family allowances
…
3·00
2·50


Motherless and fatherless children aged


Under 15
Eldest child or other children with no family
3·15
2·65


Over 15
4·65
3·90


Under 15
Other children with family allowances
2·65
2·15


Over 15
4·15
3·40


Adult orphans
…
6·00
5·00

MAIN INCREASED SUPPLEMENTARY BENEFIT RATES







Proposed Weekly Rate
Present Rate


Ordinary scale




£
£


Husband and wife
…
…
…
…
9·45
8·50


Person living alone
…
…
…
…
5·80
5·20


Any other person aged


Not less than 21
…
…
…
…
4·60
4·15


Less than 21 but not less than 18
…
…
…
…
4·05
3·50


Less than 18 but not less than 16
…
…
…
…
3·60
3·05


Less than 16 but not less than 13
…
…
…
…
3·00
2·40


Less than 13 but not less than 11
…
…
…
…
2·45
2·20


Less than 11 but not less than 5
…
…
…
…
2·00
1·80


Less than 5
…
…
…
…
1·70
1·50


Non-householder rent allowance
…
…
…
…
0·65
0·60


Attendance requirements
…
…
…
…
4·80
4·00

PROPOSED MAIN NEW RATES OF CONTRIBUTIONS FOR ADULTS


(including National Health Service contribution, but excluding Redundancy Fund contribution and Selective Employment Tax)


CLASS 1—EMPLOYED PERSONS



Insured Person



Present Rate
Increase*
New Rate



Total
Graduated
Total
Flat Rate
Graduated
Total


Employed man not contracted out:
£
£
£
£
£
£


Earnings:


£10
0·94
Nil
Nil
0·88
0·06
0·94


£20
1·39
0·03
0·03
0·88
0·54
1·42


£30
1·70
0·15
0·15
0·88
0·97
1·85


£42
1·70
0·65
0·65
0·88
1·47
2·35


Contracted out:


Earnings:


£20
1·13
0·02
0·02
1·00
0·15
1·15


£42
1·43
0·65
0·65
1·00
1·08
2·08


Employed woman (including married woman not opted out) not contracted out:


Earnings:


£10
0·81
Nil
Nil
0·75
006
0·81


£20
1·26
0·03
0·03
0·75
0·54
1·29


£30
1·57
0·15
0·15
0·75
0·97
1·72


£42
1·57
0·65
0·65
0·75
1·47
2·22


Contracted out:


Earnings:


£20
0·96
0·02
0·02
0·83
0·15
0·98


£42
1·26
0·65
0·65
0·83
1·08
1·91


* No increase in flat rate contributions.

Employer



Present Rate
Increase*
New Rate



Total
Graduated
Total
Flat Rate
Graduated
Total



£
£
£
£
£
£


Employed man not contracted out:


Earnings:


£10
0·947
Nil
Nil
0·887
0·06
0·947


£20
1·397
0·03
0·03
0·887
0·54
1·427


£30
1·707
0·15
0·15
0·887
0·97
1·857


£42
1·707
0·65
0·65
0·887
1·47
2·357


Contracted out earnings:


£20
1·137
0·02
0·02
1·007
0·15
1·157


£42
1·437
0·65
0·65
1·007
1·08
2·087


Employed woman (including married woman not opted out) not contracted out:


Earnings:


£10
0·831
Nil
Nil
0·771
0·06
0·831


£20
1·281
0·03
0·03
0·771
0·54
1·311


£30
1·591
0·15
0·15
0·771
0·97
1·741


£42
1·591
0·65
0·65
0·771
1·47
2·241


Contracted out earnings:


£20
0·981
0·02
0·02
0·851
0·15
1·001


£42
1·281
0·65
0·65
0·851
1·08
1·931


* No increase in flat rate contributions.

CLASS 2—SELF-EMPLOYED PERSONS*






Present Rate
Increase
New Rate






£
£
£


Men over 18
…
…
…
1·24
0·26
1·50


Women over 18
…
…
…
1·03
0·22
1·25

FAMILY LAW REFORM ACT 1969 (AMENDMENT)

3.54 p.m.

Mrs. Sally Oppenheim: I beg to move,
That leave be given to bring in a Bill to amend section 8 of the Family Law Reform Act, 1969 to provide that, in respect of this section only, medical practitioners are not bound by normal medical ethics as to confidentiality with regard to the parents of patients below the age of 18 years, but may use discretion in some cases.
The Bill which I hope to introduce will go some way towards the clarification of a situation which is currently causing bewilderment in the medical profession and concern to parents throughout the country and to those children between the ages of 16 and 18 who are involved.
Section 8 of the Family Law Reform Act, 1969, which gives a right to persons over the age of 16 to give valid consent to medical treatment, is not in essence challenged. It was the result of the Report of the Latey Committee which provided valuable evidence for the reform of family law. But I cannot think that the House could have foreseen some of the difficulties that have arisen as a result of that Section. Had the House done so, it might have sought to amend it then, as I am doing now, to give guidance to the medical profession in a complicated and confusing situation in which medical, legal, psychological, moral and social problems are all intertwined.
Indeed, the Section might already have been amended but for an unfortunate accident. On Report stage of the Bill on 9th July, 1969, in column 1407, my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) sought to amend it and put to the House most cogently the general apprehensions and anxieties which were widespread among school physicians with regard to the problems involved in medical ethical secrecy regarding minors at residential schools. He revealed in his speech that, unfortunately, his letter putting these important points to the Home Office in December, 1968 was lost for four months between Departments and that by the time he received a reply he was abroad and the Latey Committee recommendations had been included in the Bill which by that time had completed its passage in another place.
In replying to him in that debate on the question of the prohibition of a 16 year old patient from discussing her case with her mother the then Attorney-General absolved himself from involvement in a legal answer to the problem by saying:
Whether a doctor accepted the prohibition would be a matter for his conscience, of what he thought to be right and what he thought to be appropriate."—[OFFICIAL REPORT, 9th July, 1969; Vol. 786, c. 1421.]
That is an interpretation which I accept but which, apparently, is not acceptable to the B.M.A. or the G.M.C.
A doctor was recently brought before the Disciplinary Committee of the G.M.C. accused of breach of professional conduct in respect of breach of confidentiality of a 16-year-old patient. The ruling of the G.M.C. on that occasion, which, in effect, said that the doctor was wrong in what he did but right to do it, was hardly the clear, definitive ruling that most people think was necessary. I believe that doctors, particularly family doctors, should be allowed to use their discretion in some cases where their patients are below the age of 18, and I regret that so much emphasis has been placed on the more sensational and most publicised aspect of it—the pill. Although the pill forms a considerable part of the problem, it is incidental to the much more serious medical considerations which are involved. I have had brought to my attention cases in which youngsters aged 17 or 18 may be suffering from a serious medical or psychological illness, for example, severe depression, thrombosis, peritonitis, septic abortion or V.D., all of which involve risk to life and some of which necessitate medication which may have side effects.
Then there is the other type of case not immediately serious but potentially so, in which a doctor who knows that there is a long family history of thrombosis, when he is approached by his 16-year-old patient, may be reluctant to prescribe a contraceptive pill and feel that it is his duty to warn her parents to watch out for symptoms. Surely the parents of minors, for whom they are still legally responsible, should have the right to know in such serious circumstances as I have mentioned, the medical position of their children. Surely this is just the time when communications


within the family unit are vital, when parental affection, guidance, sympathy and practical help are urgently needed. But, as the situation stands, if in respect of any of those cases a doctor breaches the confidentiality of his young patients, he is in danger of being brought before the Disciplinary Committee of the G.M.C. I cannot believe that one hon. Member would advocate that.
Where it is possible in such cases he should try to obtain the permission of his young patient to discuss his case, but clearly where it is not he must be free, as he is not now, to use his discretion —not in the moral interests but purely in the medical interests of his patient, in the full knowledge that he holds the ultimate responsibility for his decision, and that first and foremost in his medical code of ethics is his consideration of his patient's medical or psychotherapeutic interests, and he must have legal protection for the interpretation of those interests.
I now turn to the social grounds and points of principle upon which I also seek this amendment. It is very fashionable in some circles to advocate a move away from parental influence, to say that teachers, doctors and even broadcasters are better qualified to advise children than their parents. Such people often fail to make the distinction between permitting and encouraging, and such teaching, sometimes deliberately, leads children to believe that they will not receive understanding or sympathy from their parents. Whereas this is true in the minority of cases, in the majority of cases—I believe that good parents are in the majority—it is not.
I particularly deplore any inference that poor or deprived parents are necessarily bad or inadequate ones. I have done social work—[Interruption.] I have done social work for some years in one of the most necessitous parts of the country, in which I met these families, and among them I met more good parents who loved, understood and cared for their children than anyone else. After all, who but the parents—[Interruption.]

Mr. Speaker: Order. The hon. Member for Manchester, Ardwick (Mr. Kaufman) must not shout things across the Chamber.

Mrs. Oppenheim: After all, who but the parents have the best interests and

welfare of their children at heart? It is their advice at a very vulnerable age which is motivated by their love and affection which is usually the best advice that children can get. Therefore, on these grounds too there is some justification for parents of a child below 18 to be told of serious medical circumstances concerning their children—not so that they can forbid, frighten or veto, but so that they can discuss and evaluate the problem with them. Very often the family doctor is the only link between parents and children in such circumstances.
Of course, I accept that no clear boundary can be drawn while a minority of parents are unable to accept this responsibility, and while there are some family relationships which will make it undesirable, even in the case of some children under 16. It is for this reason that I have added the words "in some cases at his discretion". Naturally I accept that confidentiality must be respected in the vast majority of cases.
The opponents of this Amendment will say that it will result in girls being scared to consult their doctors and clinics. [HON. MEMBERS: "Hear, hear."] I can only refer them to The Economist of 13th March, which pointed out that, far from discouraging them, the recent verdict in favour of Dr. Brown had prompted an unprecedented rush of business at a well-known Birmingham clinic. Equally it is easy to reel off a list of examples of parents who are inappropriate to receive confidences, but such selectivity hardly proves the case.
Finally, if it is reactionary to believe that family influence is a great force for good in our society, which should be reinforced and not undermined, and that it will be eroded if parents are not allowed to exercise their responsibility in some cases, I stand condemned as a reactionary, because this is what I believe. It is on these two important grounds, the medical-legal one and the social one, that I beg leave to amend Section 8 of the Family Law Reform Act, 1969.

4.5 p.m.

Miss Joan Lestor: rose—

Mr. Speaker: Does the hon. Lady wish to oppose the Bill?

Miss Lestor: Yes, Mr. Speaker, I do.
First, Section 8 of the Family Law Reform Act to which the Bill relates has nothing whatever to do with the confidentiality of a patient. It deals only with the problems of a minor of 16 consenting to medical treatment which might otherwise be an assault, such as a surgical operation. It has no relevance whatever to the confidential information disclosed by the patient to the doctor. The Latey Committee, which proposed this change, which resulted in Section 8, made no reference to the problem of the confidential relationship in that context, except in paragraph 482, which I advise the hon. Member for Gloucester (Mrs. Sally Oppenheim) to read.
As the hon. Member knows, any doctor is under a duty to preserve the confidentiality of any patient by reason of the code of ethics of the profession. Any breach of that duty, as happened, can be charged before the General Medical Council, which is what happened in the case of Dr. Brown and his young patient —the fact that she was taking the pill came to his knowledge through the family advisory clinic—but this duty has to go with the law of the land. The only obligation in law to preserve confidentiality is probably under the right to preserve information by an action in the Chancery Division. This was upheld and explained by the Secretary of State for Social Services in an Answer to my hon. Friend the Member for Pontypool (Mr. Abse).
One of the things which worries me about the Bill is that there is no evidence at all that the medical profession wants it. In fact, the opposite seems to be the case. The Secretary of the British Medical Association has expressed grave concern at the suggestion which has followed from the General Medical Council's recommendation that confidentiality between doctor and patient was being eroded. The B.M.A. has said that it will pronounce on what has happened in due course.
It would therefore ill become the House to allow this Bill to have a Second Reading when we do not yet know what the B.M.A. will tell us. What we do know is that they are not bewildered but are exceedingly worried about the effect of this decision upon people who have always regarded going to a doctor as confidential.
The hon. Member for Gloucester said that this had very little to do with the pill, but it was not until the question of the young girl getting the pill came up that this was ever raised. Her own Greater London Young Conservatives have opposed this suggestion of hers and have tied it very closely to the pill. They and others have made the point that what this would do is stop young people not from indulging in sexual relationships but from seeking effective advice and will encourage them to take ineffective precautions.
This suggestion is also opposed by the Health Education Council, particularly on the grounds of V.D., because the figures of V.D. among the age group 16 to 18 are very high. One of the main reasons that one has been able to encourage people to take treatment for V.D. is that they know when they go for treatment that it will be treated in confidence. The fear of all of us who are concerned with young people is that this, again will not stop them from having sexual relationships but will stop them from seeking advice on how to treat V.D., because they will fear that it will not be in confidence.
This is also true on the whole question if illegitimate births. A total of 15,000 live illegitimate births were recorded in 1969 to girls between the ages of 11 and 18. This is a very drastic increase. The same argument applies exactly. One will not stop the new attitude to sex relationships among young people. One will discourage them from seeking advice. We have a rise in the figures for abortions, which this would also affect.
The hon. Lady spoke about young people between the ages of 16 and 18. But will it affect all of them? It will not affect those who are married, or boys who can obtain supplies of contraceptives without ever going to a clinic or a doctor? Will it affect young people between the ages of 16 and 18 who were in the care of a local authority but who are no longer in care, or young people who are living away from home?
In making the case about preserving the dignity and closeness of family life, the hon. Lady is trying to distinguish between groups of people. This would only apply to young people who are living at home.


All sorts of groups of people are excluded.
I entirely agree with the hon. Lady that family life is very important. It is good, proper, right and desirable that young people talk to their parents, discuss matters with them and receive advice from them. Unhappily, it is not true of all of them. The Bill will damage the fabric of many family relationships, because the confidentiality which the young person wishes to preserve will be destroyed and the knowledge which he does not wish his parents to have will automatically come to them. This could result in breakdowns of family life.

I ask hon. Members to think carefully about how they vote. The Bill will act as a strong deterrent against young people seeking essential medical advice if they are to preserve some sort of responsibility in many of their relationships.

Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—

The House divided: Ayes 106, Noes 155.

Division No. 337.]
AYES
[4.12 p.m.


Allason, James (Hemel Hempstead)
Hall, Miss Joan (Keighley)
Oppeniheim, Mrs. Sally


Baker, Kenneth (St, Marylebone)
Haselhurst, Alan
Owen, Idris (Stockport, N.)


Baker, W. H. K. (Banff)
Hiley, Joseph
Parkinson, Cecil (Enfield, W.)


Bell, Ronald
Hill, John E. B. (Norfolk, S.)
Peel, John


Bennett, Sir Frederic (Torquay)
Hill, James (Southampton, Test)
Percival, Ian


Benyon, W.
Holland, Philip
Pink, R. Bonner


Berry, Hn. Anthony
Hornby, Richard
Proudfoot, Wilfred


Biffen, John
Howell, Ralph (Norfolk, N.)
Ramsden, Rt. Hn. James


Biggs-Davison, John
Hutchison, Michael Clark
Rees, Peter (Dover)


Body, Richard
Iremonger, T. L.
Rees-Davies, W. R.


Boscawen, Robert
Irvine, Bryant Godman (Rye)
Renton, Rt. Hn. Sir David


Bossom, Sir Clive
James, David
Rhys Williams, Sir Brandon


Boyd-Carpenter, Rt. Hn. John
Jennings, J. c. (Burton)
Roberts, Michael (Cardiff, N.)


Braine, Bernard
Jessel, Toby
Roberts, Wyn (Conway)


Bray, Ronald
Kaberry, Sir Donald
Rodgers, Sir John (Sevenoaks)


Burden, F. A.
Kellett, Mrs. Elaine
Russell, Sir Ronald


Carlisle, Mark
Kilfedder, James
Shaw, Michael (Sc'b'gh &amp; Whitby)


Chapman, Sydney
Kinsey, J. R.
Skeet, T. H. H.


Chichester-Clark, R.
Knight, Mrs. Jill
Soref, Harold


Clark, William (Surrey, E.)
Lane, David
Spence, John


Cockeram, Eric
Le Marchant, Spencer
Sproat, Iain


Costain, A. P.
Longden, Gilbert
Taylor, Edward M.(G'gow.Cathcart)


Deedes, Rt. Hn. W. F.
McAdden, Sir Stephen
Taylor, Robert (Croydon, N.W.)


Elliot, Capt. Walter (Carshalton)
Maclean, Sir Fitzroy
Temple, John M.


Elliott, R. W.(N'c'tle-upon-Tyne, N.)
Mather, Carol
Thompson, Sir Richard (Croydon,S.)


Fenner, Mrs. Peggy
Maude, Angus
Trew, Peter


Fidler, Michael
Mawby, Ray
Turton, Rt. Hn. R. H.


Finsberg, Geoffrey (Hampstead)
Meyer, Sir Anthony
Vickers, Dame Joan


Fox, Marcus
Mills, Peter (Torrmgton)
Wall, Patrick


Fry, Peter
Moate, Roger
Warren, Kenneth


Galbraith, Hn. T. G.
Monks, Mrs, Connie
White, Roger (Gravesend)


Gardner, Edward
Morgan-Giles, Rear-Adm.
Woodhouse, Hn. Christopher


Gorst, John
Morrison, Charles (Devizes)



Gower, Raymond
Neave, Airey
TELLERS FOR THE AYES:


Gray, Hamish
Nicholls, Sir Harmar
Sir Gerald Nabarro and


Green, Alan
Normanton, Tom
Mr. Fergus Montgomery.


Grylls, Michael
Onslow, Cranley





NOES


Albu, Austen
Campbell, I. (Dunbartonshire, W.)
Edelman, Maurice


Allaun, Frank (Salford, E.)
Castle, Rt. Hn. Barbara
Edwards, Robert (Bilston)


Archer, Peter (Rowley Regis)
Clark, David (Coins Valley)
Ellis, Tom


Armstrong, Ernest
Cocks, Michael (Bristol, S.)
English, Michael


Ashton, Joe
Coleman, Donald
Evans, Fred


Atkinson, Norman
Concannon, J. D.
Faulds, Andrew


Bagier, Gordon A. T.
Crosland, Rt. Hn. Anthony
Fernyhough, Rt. Hn. E.


Balniel, Lord
Crossman, Rt. Hn. Richard
Fisher, Mrs. Doris(B'ham, Lady wood)


Barnes, Michael
Cunningham, G. (Islington, S.W.)
Fletcher, Ted (Darlington)


Barnett, Joel
Dalyell, Tam
Foley, Maurice


Benn, Rt. Hn. Anthony Wedgwood
Davis, Clinton (Hackney, C.)
Foot, Michael


Bidwell, Sydney
de Freitas, Rt. Hn. Sir Geoffrey
Ford, Ben


Bishop, E. S.
Dell, Rt. Hn. Edmund
Freeson, Reginald


Blenkinsop, Arthur
Doig, Peter
Galpern, Sir Myer


Booth, Albert
Douglas, Dick (Stirlingshire, E.)
Garrett, W. E.


Brown, Bob (N'c'tle-upon-Tyne,W.)
Douglas-Mann, Bruce
Gilbert, Dr. John


Callaghan, Rt, Hn. James
Eadie, Alex
Ginsburg, David




Golding, John
Lipton, Marcus
Rhodes, Geoffrey


Gordon Walker, Rt. Hn. P. C.
Mabon, Dr. J. Dickson
Roberts, Rt.Hn.Goronwy (Caernarvon)


Gourlay, Harry
McBride, Neil
Robertson, John (Paisley)


Grant, George (Morpeth)
McCartney, Hugh
Roderick, Caerwyn E.(Br'c'n&amp;R'dnor)


Hamilton, James (Bothwell)
McCrindle, R. A.
Rodgers, William (Stockton-on-Tees)


Hamilton, William (Fife, W.)
Mackenzie, Gregor
Roper, John


Hamling, William
Maclennan, Robert
Ross, Rt. Hn. William (Kilmarnock)


Hannan, William (G'gow, Maryhill)
McMillan, Tom (Glasgow, C.)
Sheldon, Robert (Ashton-under-Lyne)


Hardy, Peter
Marks, Kenneth
Short, Rt.Hn.Edward(N'c'tle-u-Tyne)


Harper, Joseph
Marquand, David
Short, Mrs. Renée (W'hampton, N.E.)


Healey, Rt. Hn. Denis
Marsh, Rt. Hn. Richard
Silkin, Hn. S. C. (Dulwich)


Heffer, Eric S.
Mayhew, Christopher
Skinner, Dennis


Horam, John
Mellish, Rt. Hn. Robert
Small, William


Houghton, Rt. Hn. Douglas
Mendelson, John
Smith, John (Lanarkshire, N.)


Howell, Denis (Small Heath)
Mikardo, Ian
Spearing, Nigel


Huckfield, Leslie
Miller, Dr. M. S.
Stallard, A. W.


Hughes, Mark (Durham)
Milne, Edward (Blyth)
Steel, David


Hughes, Robert (Aberdeen, N.)
Morris, Alfred (Wythenshawe)
Stewart, Donald (Western Isles)


Hughes, Roy (Newport)
Morris, Charles R. (Openshaw)
Stoddart, David (Swindon)


Hunter, Adam
Mulley, Rt. Hn. Frederick
Strang, Gavin


Jeger, Mrs.Lena (H'b'n&amp;St.P'cras,S.)
O'Halloran, Michael
Strauss, Rt. Hn. G. R.


Jenkins, Rt. Hn. Roy (Stechford)
Orbach, Maurice
Summerskill, Hn. Dr. Shirley


John, Brynmor
Orme, Stanley
Taverne, Dick


Johnson, James (K'ston-on-Hull, W.)
Oswald, Thomas
Thorpe, Rt. Hn. Jeremy


Johnson, Walter (Derby, S.)
Paget, R. T.
Urwin, T. W.


Jones, Dan (Burnley)
Pannell, Rt. Hn. Charles
Wainwright, Edwin


Jones, Rt.Hn.Sir Elwyn(W.Ham,S.)
Pardoe, John
Walden, Brian (B'm'ham, All Saints)


Kaufman, Gerald
Parker, John (Dagenham)
Watkins, David


Kelley, Richard
Pavitt, Laurie
White, James (Glasgow, Pollok)


King, Tom (Bridgwater)
Pentland, Norman
Whitehead, Phillip


Lamble, David
Perry, Ernest G.
Wilson, Alexander (Hamilton)


Latham, Arthur
Prescott, John
Wilson, William (Coventry, S.)


Lawson, George
Probert, Arthur



Lee, Rt. Hn. Frederick
Rankin, John
TELLERS FOR THE NOES:


Leonard, Dick
Reed, D. (Sedgefield)
Mr. Alexander W. Lyon and


Lestor, Miss Joan
Rees, Merlyn (Leeds, S.)
Mr. John Fraser.

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [30th March],

Orders of the Day — AMENDMENT OF THE LAW

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but—
(1) this resolution shall not authorise the making of amendments of the enactments relating to purchase tax, other than amendments about the remission of tax on exported vehicles, and other than amendments making the same provision for chargeable goods of whatever description, or for all goods to which any of the several rates of tax at present applies; and
(2) neither this resolution nor any resolution relating to selective employment tax shall authorise the making of amendments of the enactments relating to selective employment tax so as to give relief from tax—

(a) by way of exemption from, or a reduction in the rate of, tax except in respect of all persons of the same descriptions relevant for determining the rate of the employer's flat-rate contribution with which the tax is combined, whether that contribution is under the National Insurance Acts or under the corresponding enactments in Northern Ireland; or
(b) by way of providing for payments to employers of an amount equal to the whole or a specified part of the tax paid if the proposed provision—

(i) is in respect of employers in, or at establishments in, part only of Great Britain; or
(ii) extends to employers in, or at establishments in, Northern Ireland; or
(iii) is in respect of all persons in any particular description of employment in all parts of Great Britain, and relief in respect of the whole of the tax paid could be given in respect of that description of employment by an order under section 9(1)(a) of the Selective Employment Payments Act 1966 adding that description of employment to the employments to which section 1 or 2 of that Act applies; or
(c) by adding or removing any employer to or from the employers to whom section 3 of that Act applies, or
(d) by amending the provisions of Schedule 1 or Schedule 2 to that Act.

Question again proposed.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

4.21 p.m.

Mr. Roy Jenkins: I begin by congratulating the Chancellor most warmly upon his presentational performance yesterday afternoon. As I know only too well, a Budget speech in any circumstances is a formidable event for a Chancellor, and that is especially so when it is a first Budget. In addition, the right hon. Gentleman had a formidable amount of material to present to us, and I should like also to congratulate him upon the amount of work done, with the assistance of his advisers, in the past eight months. About the result of that work, I am a little more reserved, but about its quantity there can be no doubt. To have presented all these results in a speech which lasted less than two hours was a great feat of compression, and only very occasionally did the right hon. Gentleman sacrifice lucidity to time. As a result, naturally, there was less economic analysis than is usual, but I suspect that the House can always bear that with a degree of equanimity.
On monetary policy, the right hon. Gentleman was a little thin. New methods of control, he told us, had been studied and would be discussed. But he gave us very little beyond that. In the meantime, existing methods of bank control will continue with an increase of 10 per cent. instead of last year's 5 per cent., unless there is a modification, which he rather hinted at, during the year.
I was not quite clear whether the 2½ per cent. a quarter increase is to be above the present level of bank lendings or above the 105 per cent. ceiling laid down for the year, which it is below at present. I do not know whether the Chancellor or the Financial Secretary can answer that immediately, or the Secretary of State for Trade and Industry, who is to reply later. I should like to know the answer, although it is not of great significance at the moment because, owing to the depressed state of the economy, there is no real pressure to borrow from the banks.
None of us knows whether the Chancellor intends to bring down the Bank Rate tomorrow. Certainly I think he should do so, because our rate is now


well out of line with rates in other centres, which is a position quite different from that of a year ago. If he intends to do so this week, on the whole I think it would have been better to have announced it yesterday so that it could have been taken into account in our discussions then and today. I incurred a little mild criticism for doing this last year. I hope the right hon. Gentleman was not put off by it. It is his decision to make, and there is a certain conflict here between courtesy to the House and the country on the one hand and the Bank on the other hand. But it would, on the whole, have been wiser, if there is to be any action, to give the House and the country the full picture. I am sure the Bank would have understood.
Much of the Chancellor's speech was devoted to longer-term measures. I shall deal only briefly with each of those today, because there is a good deal of vagueness at this stage about the proposals, and I think it right that we should study the two Green Papers and return to them later on the Finance Bill, though perhaps some of my hon. and right hon. Friends will touch on them in this debate.
The House will be glad to hear that my speech today necessarily must be a good deal shorter than the Chancellor's. In it I want to concentrate upon the relevance or irrelevance of the Budget to our present economic problems and upon the taxation measures which come into effect immediately or in the near future. However, before I get on to them perhaps I might say a few words about each of the long-term proposals.
The first is the future of the corporation tax. I do not believe that the direction here proposed is economically right. A system which will encourage distribution of profits and discourage retention and in which there may actually be a lower tax burden on a company if it makes higher dividend payments looks very perverse in relation to our problems of investment and of discouraging inflationary wage claims. My hon. Friend the Member for Heywood and Royton (Mr. Barnett) will have more to say about this tomorrow, and so shall I at a later stage.
The next is the amalgamation of income tax and surtax. In my view, there is no objection in principle to this. But it

will need to be judged very closely on how it is worked out. It could just be a cloak for making the direct taxation system much less fair and progressive. On present form, that seems dangerously likely. But I do not believe in making abstract judgments. We shall see what the Chancellor eventually brings before the House and judge it on its merits. A smoother progression might have advantages, although this may produce unexpected results in the middle income ranges.
I turn to the value-added tax. The Chancellor was fair about this in relation to the European Economic Community. He did not put it forward on that ground at all. He put it forward on its own merits. My position is the reverse of his. Like my right hon. Friend the Leader of the Opposition, who mentioned this yesterday, I should regard it as an acceptable price to pay if we could get reasonable terms for entry into the Common Market. But I should regard it as a price, and I do not see the case for accepting it for its own sake. It will be much more expensive and cumbersome to operate than purchase tax and S.E.T. in companies.
Yesterday right hon. and hon. Gentlemen opposite cheered loudly at the prospect of getting rid of the 2,000 employees from the Surtax Office, although I suspect that under the new arrangements most of them will be absorbed in other Inland Revenue duties. But are right hon. and hon. Gentlemen opposite aware that, according to the best Customs and Excise estimates published in the N.E.D.C. Report in 1969 and in no way contradicted in yesterday's Green Paper, a V.A.T. will involve an extra staff of between 6,000 and 8,000 above that now employed for S.E.T. and purchase tax.
More important, however, will be the effects on the cost of living, especially on that of the lower-paid. The Conservative Party, having talked about it a good deal before, went very quiet on the V.A.T. during the election campaign, and for very good reasons. But we always predicted that it would be an essential part of their taxation changes, and we have been proved right. A whole new range of items will be subject to tax; rail and bus travel, coal, gas and electricity, children's clothing, certainly housing


repairs and maybe house rents—the Green Paper was rather vague about this —canteen meals, and many other goods and services. The rise in the cost of living might well be very sharp, and will certainly be substantial. As compared with a combination of purchase tax and S.E.T., which are more progressive, the worsening in the position of the lower-paid would be several percentage points. Without compensation for that, the results would be quite intolerable. Will the compensation be forthcoming? If the indications of the past six months are any guide, this might be provided for very limited numbers of the worst-off, but not for the bulk of those affected. The outlook for them would be dismal.
I turn to the more immediate effects of the Budget. What are the tests by which it should be judged? It certainly should not be judged simply by the plaudits of the moment. I expect that the Chancellor is as much aware of that as any of us. He must recall vividly the euphoria of that "jolly, jolly sixpence" morning immediately after his October measures, and the disillusionment which set in within 10 days. He will also recall lain Macleod's dictum that all Budgets which looked good in April looked bad in July, and vice versa. I always regarded that, like many illuminating remarks, as something of an exaggeration, but it points to a certain equanimity of response to immediate judgments both good and bad.
It is also the case that a Chancellor should be judged much more by how he manages the whole economy throughout the year than by the tax changes he announces on a particular day in March or April. Of course, these changes may have a big effect on the performance for the year and further ahead. Beyond that, the annual set-piece of the Budget Statement and the Budget debate provides the obvious occasion for reviewing the state of the economy as a whole, for looking at its more important needs and considering the prospects of the Government's policies meeting those needs.
What are the main needs of the economy at present? I shall set them out in a way that will enable us to judge as the coming financial year proceeds how far the Budget is adequately directed to meeting them. The first I would say is a rate of price increases for 1971 significantly lower than that for 1970. It is

not enough for the Government to talk all the time only about wages. It was the promise to stop price increases which, more than anything else, won them the election. We did not hear all that much from them about incomes, apart from those of the doctors, during that period. Any sensible person wants to see a slowing down on a fair basis of wage and salary increases, but this cannot be done independently of prices. For one thing, it is very unlikely to be achieved. There is no reason at all why people should put up with a fall in their standard of living in present circumstances. For another, if it did happen and prices continued for a period to bound ahead much faster, the effects would be highly undesirable. There would be a shrinkage of real demand which would undo what the Budget claims to achieve for the level of production and the pace of business activity. The behaviour of prices during the remainder of the year will, therefore, be a fair guide to whether the Budget has helped to bring inflation under control.
What has the Budget done in that direction? What has it done to deal with what the Government are constantly telling us is the most urgent problem facing this country? Very little indeed. There is the S.E.T. cut. I do not believe that even on the most optimistic assumptions that will make a difference of as much as a half of 1 per cent. on the retail price index. There were one or two very minor optimistic noises last night, but the Daily Telegraph, which would not have wished to present the cut unduly unfavourably, carried a headline over a front-page story by its business correspondent this morning saying
SET cut unlikely to reduce prices".

Sir Gerald Nabarro: Most of the others said the opposite.

Mr. Jenkins: They were probably briefed by the hon. Gentleman.

Sir G. Nabarro: rose—

Mr. Jenkins: If the hon. Gentleman interrupts from a sitting position, he must expect an occasional response without the Member who gives that response having to give way for him to pontificate for a few minutes.
If the Government believe differently about the effect of the S.E.T. cut, let


them monitor the position, if they still have any price-monitoring agencies left, and make a three-monthly report to the House on what the S.E.T. cut is meaning in terms of price reduction. The Budget remits £550 million of taxation, £680 million in a full year, remissions which represent no dividend from the activities of this Government. What they have done is to use our balance of payments surplus and our cautious budgeting of last year and they have contributed nothing of their own, except a record post-war level of unemployment. I find it extraordinary that with taxation concessions of that scale the Government should not have produced a bigger impact—they have produced no significant impact—on the vital prices front. They could have done so. There are two taxes which are to be abolished in 1973 —at a price—purchase tax and S.E.T. If they had chosen to cut purchase tax instead of S.E.T. this year, they could have had an effect at least three times as big upon the retail price index.

Hon. Members: At a stroke.

Mr. Jenkins: It would have been a somewhat delayed stroke. But they have been the prisoners of their own doctrinaire objection to S.E.T. As a result, they have missed a substantial opportunity to make a worth-while impact on the major problem of rising prices. Continuing price increases will rapidly erode such direct taxation concessions as are given to the bulk of taxpayers, not the big concessions, but those given to the bulk of taxpayers.
I am a little sorry and surprised not to see the Prime Minister here today. Last year he centred his criticism on the fact that the Budget was a one-month Budget—

Mr. Kenneth Lewis: My right hon. Friend is not here because he has heard it all before.

Mr. Jenkins: He has heard this before, because it was what he himself said a year ago, but it would not do him any harm to hear it again in present circumstances. He said that it was a one-month Budget because the tax remissions of £220 million were equivalent to one month's increase in prices. He based that

on the price increases of 3½ per cent. in the six months to February, 1970. On the same basis—5 per cent. in the six months to this February, and even reducing it for the likely effect of S.E.T.—this Budget, so far as the ordinary citizen is concerned, to use the Prime Minister's phrase—in other words, taking tax remissions which directly affect the bulk of individuals—is at best a three-week Budget.
The second major need of the economy is a rapid reduction in the present level of unemployment, a reduction leading to a significantly lower run of figures next winter than those which the country has suffered in the last few months. I find no hint in the Chancellor's speech that he expects to achieve this. He suggested, at most—the right hon. Gentleman was fair and straightforward about this —that he would prevent the "degree of slack" which already exists in the economy from increasing further. In other words, there will be a stabilisation of the present level of unemployment.
In his broadcast last night the Chancellor spoke of the pre-Budget forecasts available to him which had shown the prospects of unemployment getting much worse. He should tell us how big a rise was shown and what is now the forecast for unemployment next winter, after the Budget. It was obviously a central consideration in what he did. We should, therefore, know the prospect both before and after the Budget.
I well remember how after previous Budgets, when the levels of unemployment were between 150,000 and 200,000 below that of today, the then Shadow Chancellor of the Exchequer, who felt strongly about these matters, constantly complained that it was intolerable that those levels should be allowed to continue, and he pressed hard for detailed estimates of the unemployment prospects. Those details are of greater relevance today.

Sir Harmar Nicholls: I wonder what unemployment was when the right hon. Gentleman was Chancellor.

Mr. Jenkins: If the hon. Gentleman had been listening he would have heard me speak about the time when the figures were between 150,000 and 200,000 below what they are today.
It was not only the then Shadow Chancellor who was taking that attitude. The present Prime Minister, speaking in Dundee on 9th September, 1969, said:
We cannot tolerate a waste of human and economic resources brought about by their uneven use in different parts of the country. We refuse to condemn large parts of the Kingdom to slow decline and decay, to dereliction and to persistent unemployment, in pursuit of old-fangled 19th century doctrines of laissez-faire.
It is a pity that the Prime Minister is not in his place to hear me quote those words he used.

Mr. William Ross: Where is he? Scotland wants to know.

Mr. Jenkins: The right hon. Gentleman went on:
We shall act to bring new life to those areas suffering from high unemployment or depopulation. We shall act to encourage a sensible spread of industry. We shall act to enable the wealth that comes with it to be enjoyed in all parts of Scotland and across all parts of Britain.
When he used those words in Dundee, unemployment in Dundee was 2,579. Unemployment in Dundee today is 5,354. What does the Budget do to give special help to Dundee, to the rest of Scotland and to the weaker regions generally? Precisely nothing.
I estimate that we are now producing nearly 10 per cent. below our capacity. We are losing between £3 billion and £4 billion of potential national wealth. The demand effect of all the Budget measures is put at £250 million direct and £350 million with a multiplier effect. We are not reflating the economy. At best we are preventing it from deteriorating further.
It is clear from the position the Government have now adopted that they should have taken this action much earlier. Their position, as we understood it, was that there could be no attempt at reflation until inflation, particularly in wages, was under control, as they saw it. There is no real indication that that has happened. It is merely a hope expressed by the Chancellor and the Prime Minister. However, they have clearly reversed their policy, but they have reversed it too late, for they have wasted at least six months of strong balance of payments during which time it would have been possible to be push-

ing the economy forward and not allowing it to stagnate as it has been doing.
The third major element or need of the economy is a reversal of the present nearly disastrous trend in the level of industrial investment. The Prime Minister, who deals with trends in a somewhat peculiar manner, tried to take credit at Question Time the other day for marginal improvement in the second half of 1970 over the first. A glance at the quarterly figures should have made it obvious that that was an unwise point to make. But the Chancellor contradicted it yesterday when he said—I thought it was an under-statement—that there was a flattening out in the trend of private industrial investment. He added that there would have been the likelihood of a fall.
None of us can yet know how much of a correction yesterday's measures will provide. Certainly the Chancellor's estimate in the Budget Report gives no ground for confidence, with no increase in the second half of this year over the second half of last year, and with an increase of only one-half of 1 per cent. in the first half of next year over the first half of this year. I do not believe that the corporation tax cut is a powerful incentive here, and it looks from his forecasts as though the Chancellor shares my view. The Government were foolish to abolish investment grants last autumn when an acceleration of payments would have been invaluable. They have thrown away this valuable weapon at exactly the wrong time.
The fourth major element in the economy is the need for, and prospect of, a good balance of payments position. We do not need to look for a further improvement here. It is in no way necessary, so strong has been the recent performance. Of course, had the Prime Minister been remotely right last June, when he talked about a "deteriorating trend", the position would now have been very different. But that was just another example of his somewhat peculiar attitude in these matters to which I referred.
The Prime Minister's idea of an economic trend is a random movement of figures which, if one's conscience is not too acute, can be interpreted in such a way as to benefit the Conservative Party.
But the right hon. Gentleman was not alone. Even the moderate Home Secretary, speaking with all his great knowledge of balance of payments surpluses, said on 15th June:
It is all very well for Labour to talk about last year's surplus. Last year was last year. The situation will not get better—it will get worse and we are over the hump already.
But that was not true, as the earlier part of the Chancellor's Statement yesterday made abundantly clear. In other words, they were both talking nonsense, though not innocent nonsense.
As a result, a British Chancellor, for the first time for nearly a decade, has not had the balance of payments breathing down his neck. Thus, his room for manoeuvre has greatly increased. For all the talk about the legacy, he is a very lucky man in this respect.
We should not, therefore, expect an improvement in the balance of payments, or even necessarily a maintenance of the present very high figures. I believe that a good surplus should be maintained, but if the three other objectives had been achieved, then some run-down in the size of the surplus could now have been reasonably accepted. However, I am sure that two of these objectives will not be achieved, and it looks highly unlikely that the third will be achieved either. In present circumstances we could and should have set a course for sustained growth of a strength and consistency which has eluded us for 15 years or more past. I am doubtful whether the Budget has done this. Its objective is merely to prevent our spiralling down further into higher unemployment and more unused resources.
I turn now to the redistributive effects of the Budget, to the effects on individuals. I think it would be agreed that it is appropriate here to combine the effects of the mini-Budget with those of the Budget and include also the method of financing the pensions increases. I start with those who will gain substantially. Let us be in no doubt that a limited number gain massive amounts. A married man with two children with an earned income of £10,000 got £195 from the mini-Budget. That amount has now been increased to £410. At £20,000 a gain of £445 has been increased to one of £2,041. At £50,000 the gain is no less than £6,800.

Mr. John Gorst: Are not they worth it?

Mr. Jenkins: If the hon. Gentleman will stand up, we will judge whether they are worth it.

Mr. Gorst: Is the right hon. Gentleman suggesting that the better-paid members of his own side, for example, are not worth the extra amount they are receiving?

Mr. Jenkins: I am suggesting that I do not think it a Budget priority to give £6,800 of tax remission to any one individual.
But this is in no way the end of the story. If persons in these categories are self-employed or employed without a pension scheme, they can save up to an additional £750 a year at a cost to themselves, at £20,000, of only about £160. They can then get the result not in an annuity as hitherto but in a tax-free lump sum. If a man is married to an earning wife with a substantial income of her own there is a further big benefit from the disaggregation of the wife's income. This provision is only of value where the combined income is above £5,200 a year. Where the huband is earning, say, £10,000 and the wife £5,000, the benefit could be as big as £1,434—almost exactly the amount of the gross average wage—above the sums I have already mentioned.
But even that is not the end of the story. There are substantial benefits for those concerned with close companies. There is the disaggregation of children's income. There is the ending of capital gains tax on death and on a 15-year basis of discretionary trusts.

Sir G. Nabarro: Hear, hear.

Mr. Jenkins: I am surprised hon. Members who are so anxious to see corporation tax encourage distribution and, as they see it, greater flexibility should take this view, because the removal of capital gains tax on death will have a locking-in effect on securities, which runs very much against the basic idea of the Government here, and it is by no means only family businesses which are concerned.
There is the effect, in addition to this, of the two cuts in corporation tax upon share values and dividend prospects. I


am not suggesting that all these measures are bad, although I think that some of them, notably the disaggregation of children's income and the change in capital gains tax, are very bad indeed. But what cannot be denied is that their cumulative effect is massive, not so much upon the revenue as upon individuals, and those affected in all cases belong, broadly speaking, to the same limited group. Some members of it will get four or five substantial and separate benefits out of this Budget. There is a grossly excessive concentration of remission at this end of the scale.
Yesterday, when the Chancellor gave the figure of cost for the only concession which directly affects the ordinary run of taxpayers and announced it as £163 million this year and £207 million in a full year, and then announced the cost of the higher incomes relief at £16 million this year, there was a lot of Tory cheering, presumably in the belief that these figures proved beyond doubt the fairness of the balance—so much cheering, indeed, that the full year figure of £38 million was completely drowned. I do not think any of us heard it and we did not learn about it until we were able to read the speech afterwards. The £207 million is five and a half times £38 million. About six million people share the £207 million. How many people share the £38 million? A few hundred thousand at the most. Will the Financial Secretary give us the figure?
These cumulative arrangements, amounting in many cases to a great number of separate benefits for the same people, must also be seen against the background of Monday's announcement about the three waiting days for sickness benefit. To save £19 million in this form as a prelude to the vast tax hand-outs I have just listed shows an extraordinary degree of insensitivity to the needs of the ordinary people.
It has also to be seen against the background of widespread Press leaks that the cost of some prescriptions will rise to 50p. Will the Government deny the truth of these leaks? They are an important part of the picture.
I now turn to the alleged benefits for the less well off. First, there is the pensions increase. We certainly welcome this. It is overdue. We are told that it is being done at the earliest practicable

date from now, but that date could, of course, have been brought forward if notice had been given earlier. The pace of price increases and its effect upon the standard of living of pensioners has not just become apparent. It was fully apparent in the autumn and there was, in effect, an autumn budget. In 1964, we announced our pensions increase in the autumn and brought it in in the spring. Had the Government so desired, the same could perfectly well have been done on this occasion.

Mr. William Clark: It is more than the last Government ever gave.

Mr. Jenkins: It is 20 per cent. But we never had such a great inflationary rate. The rate of inflation in the two years following devaluation was just below 5 per cent. in one year and 5.1 per cent. in the other.

Mr. Clark: Would the right hon. Gentleman be frank and agree that the rate of inflation we are suffering now started when he was Chancellor simply because the industrial relations Measure which he dearly wanted to introduce was rejected?

Mr. Jenkins: I do not think it started then but it certainly started in the days of the previous Government. However, the view which hon. Members opposite cultivate so sedulously—that it was peculiarly the fault of that Government —is extraordinarily myopic when the start of the inflation here at a rapid pace coincided with its start in almost every other advanced industrial country in the world. Hon. Members know this perfectly well. Inflation has gained momentum since this Government came in, and this Budget, with all its opportunities, has done nothing to stem it.
This pensions increase needs to be substantial to restore the absolute, let alone the relative, standard of living of the pensioners. For the next six months they will be worse off than at any time since the 1965 increase. They will then be a little better off than they have been recently, but for how long? On the price projections of the National Institute, which are certainly not extravagantly high—it is very cautious here—pensioners will fall back again well below their 1969 standard by early next year with only a


fraction of the normal two-year period having gone by. The Government will have to move again very quickly if there is not to be not only a delayed relief but also a short-term relief for the pensioner.
I now come to the position of the ordinary family wage earner. After the mini-Budget I presented some figures showing that the married man with two children at £27 a week was significantly worse off as a result of the Government's package and that a person with children needed to be earning approximately £3,000 a year to come out neutral or, still arguably, a little worse than neutral. Those figures were not challenged. Now it may be though that the position has been radically changed by the extra £40 of children's allowance. That is not so. This will be to some extent offset by the extra national insurance contribution and by the large average increase in local rates. At £27 the man may now just about break even as a result of the Budget and the mini-Budget combined.
At £40 a week, because of the steeper rate of national insurance contribution the man will be worse off. All benefit of the increased children's allowances is more than removed, as my hon. Friend the Member for Hitchin (Mrs. Shirley Williams) brought out this afternoon, by the increased contribution at that level. I wonder how many people in this group, when they read the tax tables this morning, realised exactly what was involved in the whole deal. These calculations are without making any allowance for the food, fares and rates increases caused by Government policy, nor for the rumoured further big increase in health charges which I mentioned earlier. There has not been a flicker of denial from the Government Front Bench.
This is all as a result of Government financial policy in a year of massive tax remissions, with hand-outs of several thousands pounds a head to big taxpayers. In addition, there has been nothing in either instalment of the Budget to raise the tax threshold for single persons or married couples without children. How many people in those two categories will be paying tax this year as a result of inflation who were not doing so last year? Many of them will be worse off. The number must be substantial, and I

hope that the Financial Secretary or the Secretary of State will give us the figure.
The Budget, like the mini-budget, will be socially divisive and not unifying. It will make a further mockery of the Prime Minister's words on the steps of Downing Street on the evening when he took office. I quoted them in November, and I quote them again:
Our hope is not to divide but to unite, and where there are differences to bring reconciliation.
Reconciliation? This Budget does not reconcile. It accentuates the differences that exist in our society. It does practically nothing to restrain prices. It will make more difficult the achievement of an incomes policy, to which I believe this Government will have to come. It accepts the present level of unemployment, and it may not succeed even in holding that. There is a lot for the few and very little for the many. It is not a Budget for strengthening the economy; it is a Budget for strengthening inequality.

5.5 p.m.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): The speech of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) has ranged very widely over what my right hon. Friend the Chancellor had to say yesterday. There is one point in what he said that I would like to take up. He promised us that the undoubted enthusiasm with which the Budget Statement of my right hon. Friend was greeted will give way within a short time to disenchantment. I do not believe that for a minute, and I do not believe it because the Budget comprises the essential elements of a wise and sound strategy for this country. It has done this both in terms of the long-term development of our whole fiscal system as well as in terms of individual shorter-term considerations which so glaringly needed attention. The breadth and coverage of my right hon. Friend's Budget Statement constituted an impressive survey of our national economy and our national prospects.
I will not endeavour to attain the same coverage as the right hon. Member for Stechford. This is not because of any sense of a lack of involvement of the many issues concerned, such as social,


monetary and fiscal policy. I believe it is now established beyond question that the inter-meshing of all these issues with the whole of the welfare of the trade and industry of the country, and their respective effects on one another, is so real as to make such a lack of involvement quite unrealistic.
However, on the Government side there will be several speakers directing their remarks specifically to individual parts of this package. There will be those dealing with the social aspects and those dealing with the macro-economic factors. I shall therefore concentrate on questions concerning trade and industry. I will try to place my remarks in the context of the Chancellor's Budget proposals and the general appraisal of our economic state which his Statement so thoroughly examined. My intention will be first to look at the state of our external trade and its impact upon the balance of payments and then to consider the internal state of our business welfare and its prospects.
In another capacity I had a good deal of opportunity to see much of the activities of the right hon. Gentleman when he was wrestling with the immensely difficult problems of the balance of payments, at the time of devaluation and immediately afterwards. He will not find me grudging in my appreciation of what he did then. I well recall the resolution with which he grappled with what seemed an utterly unresponsive situation and the draconian fiscal and monetary measures to which he was driven in seeking to remedy that situation.
His efforts to achieve a turn-round in the dreary pattern of negative balance on current account and their embarrassing concomitant—steadily mounting foreign indebtedness—are very live in my memory. Indeed they are so deeply burned into it that two short years of positive balances have by no means eradicated the memory of the frustrations and difficulties of those negative years. Those experiences left a quite indelible mark on my mind and made me aware of the need to be watchful ever afterwards to ensure that we should not slip back into the trough of deficit that for so long a period was the principal determining factor in the whole of the conduct of our economic policy.
I see with satisfaction and relief that 1970 registered the best ever positive balance of £643 million, including a net gain, although a small one, of £3 million on visible account. Some tribute should be paid to that because it is an unusual factor in our external accounts. We habitually live with visible deficits rectified by invisible surpluses. Even when I see this in sequence to a positive current account balance of £437 million in the preceding year, 1969, and even when I recognise the substantial achievement of a turn-round of £940 million between 1968 and 1970, I am not thereby led to any feeling of complacency whatever about the inevitability of such a situation, nor to assume that the turnround is irreversible.
Nor does this scale of credit seem to me an unnecessary one to preserve at its present strength. There are those—and the right hon. Member for Stechford suggested this—who seem to infer that this advantageous position should in some sense be expended for some desirable social purpose, nationally or internationally. But such a proposition leaves out of account several important facets. First, the years of deficit left us with very high international debts. Yesterday the Chancellor of the Exchequer was able to give us up-to-date news about them, I think to the satisfaction and comfort of the whole House. He said that from the terrible peak of over £3,000 million which we owed in 1968 we have brought down our overseas indebtedness to less than £700 million. But £700 million is still a heavy balance to owe, and we must cope with it in the years to come.
A second and no less vital factor is that our application for membership of the European Economic Community, even when a satisfactory negotiation has taken place, is likely to cause a net outflow of exchange in the early years until the very real benefits which we foresee start to flow in. Clearly, we must aim to enter with a strong balance of payments position.
Thirdly, the recent renegotiation of oil agreements, of which major elements remain to be finalised, inescapably implies substantially heavier charges for this purpose which, though they apply equally to all industrial countries, nonetheless have to be borne on the exchange. Our vital


need, therefore, is to husband our position of strength and, where possible, still further to reinforce it. This must be clear to all. Yet recent indications are not reassuring.
The Chancellor of the Exchequer mentioned yesterday that 1970, measured against 1969, revealed some contrasts in both export and import figures which are, to say the least, disquieting. He mentioned that the total export figures for 1970 showed a growth which, as to two-thirds, was represented by price increases and only one-third by volume. If we look at 1970 more closely we see a yet more disturbing trend between the first and second half years. Although the figures for the second half year are not conclusive, it is to be wondered whether there was any increase in volume at all and whether the improvement in the balance was achieved solely through price increases.
The outlook for 1971 is still for an overall substantial surplus, but the tendencies to which I referred may, and almost certainly will, reverse the rarity of a visible trade surplus into a visible deficit outweighed by a large invisible surplus.
But we cannot afford to be complacent about such a trend. It causes us to look carefully at the preservation of our international competitiveness, and such a scrutiny leaves us with a clear impression that over the last three years we have been gradually but steadily losing way against the competition from other industrialised countries. Statistics are by no means conclusive, but it seems to me from such assessments as I have been able to make that there was the clearest evidence before devaluation in 1967 of the extent to which our own export prices were excessive in relation to those of our competitors. Devaluation changed that situation substantially; there was a marked change round in the position. Figures which competent authorities have put before me show that that clear advantage had been whittled away almost to nothing by the end of last year.
This erosion of our competitive edge is the result of sharply rising costs, particularly in wages, over the recent past unmatched by any real alleviation arising from higher productivity. It constitutes one of the threats to our economic health arising from the inflationary momentum

which has prevailed over the past 18 months. It is not the least of the reasons for which the Government have seen their most pressing economic need is the containment of the excessive inflation, and particularly the rapid escalation of industrial costs arising from disproportionately high wage settlements. That inflation threatens so much in our national life but not least the assurance of our ability to pay our way in the markets of the world.

Mr. Stanley Orme: Why is it wrong to oppose wage increases for average wage earners but to give disproportionate increases to people at the surtax level?

Mr. Davies: I have been referring exclusively to excessive wage settlements in relation to the productivity obtained. They have been of a variety of kinds and they have been working through the economy to its damage for months.
While on the subject of our visible trade with the rest of the world, it is worth drawing attention to some important underlying tendencies which more and more condition our trading objectives. First of all, we have to be thankful for the continuing buoyancy of world trade over recent years. The year 1970 probably saw some moderation in this upward trend, but it seems probable that the pace will again start to quicken and this will be in part due to the revival of the American economy.
I say that we have to be thankful for this buoyant condition because it has allowed us to maintain high levels of trade with the rest of the world despite a progressive erosion of the proportion of that trade which we secure. In 1955 the United Kingdom accounted for about 20 per cent. of the main manufacturing countries' exports of manufactures. But 15 years later we account for little more than half this figure. Had it not been for the constantly mounting trade internationally, we might well have found ourselves in real difficulties.
The healthy condition of world trade is a consequence of all the effort expended in the postwar years by the main trading nations progressively to remove the obstacles to the exchange of goods and services. Such improvements have come about, not only as a result of wide-ranging agreements covering the whole


of international trade, such as those in G.A.T.T. and more recently in the Kennedy Round, but also in the more selective improvements resulting from the constitution of such bodies as the European Economic Community and the European Free Trade Area. All these initiatives have combined to ensure a world market of a size and freedom of access that offer great opportunities to Britain for the future providing we keep ourselves competitive in design, quality, delivery and, last but not least, price.
Secondly, we have seen and will continue to see a transformation in the destination of our exports of a kind which few, if any, countries other than our own have had to face. The figures for only three of our major markets are striking and their importance is perhaps insufficiently acknowledged. In 1955, 45 per cent. of our total exports went to the sterling area. In 1965, the percentage was 34. Last year it was 27½ per cent. In 1955 29 per cent. of our exports went to Western Europe, and 10 years later they had risen to 37½ per cent. Today they are over 41 per cent. In 1955 North America took 12 per cent. of our exports; in 1965 the figure had risen to 15 and that is the figure at which it has stayed since.
This major reorientation of our export effort involving the constitution of totally new markets very often does not earn the appreciation it should. Despite the overall decline in the total proportion that we hold of world trade, the redirection of our trade in the light of different relationships and a different trading environment has been a considerable achievement on the part of industry. We were over-reliant on the slower growing markets, and a massive effort has gone into changing the direction of our trade to the faster growing areas.
Thirdly, there has been a substantial shift in the nature of our exports flowing in very large degree from the re-orientation nationally to which I have referred. The position occupied by engineering products has steadily strengthened at the expense of textiles and non-manufacturers. This shift is characteristic of the ever greater movement of goods between sophisticated industrial nations, and this is where the great buoyancy in world trade, to which I earlier referred, arises, and it involves a heightening tension of

competition between highly expert and evolved manufacturing nations vying strenuously with one another in products of ever greater refinement and sophistication.
It has for some time been recognised that in such a contest for markets the products of developing countries might well be squeezed out with the effect that incipient industries might fail to survive the first early years of gaining experience in world markets. With this in mind the industrialised countries have been seeking to make arrangements whereby tariff protection devised to regulate competition between themselves should not impede the movement of products from developing countries. The result has been the conclusion of agreements within the framework of the United Nations Conference on Trade and Development—U.N.C.T.A.D.—whereby many of the tariff impediments would be removed.
I am glad to be able to tell the House that we propose to include in the Finance Bill this year the enabling powers which will allow us, by subordinate legislation to be submitted to Parliament in due course, to introduce such measures as are necessary to implement these undertakings. As far as the United Kingdom is concerned this involves offering duty-free entry on all industrial goods imported from the developing countries, with the exception of most textiles and goods subject to Revenue charges. Moreover, we will afford duty-free entry—or, in some cases, a reduction of duty—on a range of processed agricultural products.
As I have already said, the characteristic pattern of our external trade is one involving a deficit on visibles and a surplus on invisibles; 1970 was exceptional, as I have said, in that regard, in that there was a small surplus on visible trade. It seems likely, however, that we shall in the foreseeable future return to that there was a small surplus on visible trade modestly in deficit and invisibles well in surplus. However, here, too, we must be on our guard against any sense of complacency. Although generally we look forward with confidence to the continuing satisfactory performance of service industries in foreign markets and to the revenue derived from overseas investments, there are one or two less favourable elements in the invisible account to offset the generally strong picture.
In particular, I have referred earlier to the impact of recent, and perhaps imminent, agreements upon the cost of our oil for our own needs. Additionally, however, there is the impact of those agreements upon the invisible elements of our income arising as a result of the prominent position of British oil interests in world markets. The secondary effect of these agreements may have implications of a substantial kind on these indirect oil revenues.
Moreover, we expect to see the balance on travel account move adversely in the immediate future, though it is not anticipated that the account itself will move out of surplus.
The net result of these tendencies is the expectation that invisibles may not show any further improvement in the immediate future, although there is prospect of continued progress thereafter.
All in all, then, our trade with the world at large is giving us the results we seek, but with no margin to induce complacency and with some facets which demand concern and urgent attention—

Mr. John Biffen: Before my right hon. Friend moves from invisibles, would he share with the House his thinking on what he would like to see emerge with the new style corporation tax and the Green Paper? The corporation tax which we now have has a very considerable adverse effect on companies which have considerable overseas interests. Would he hope now to restore the position which existed before the 1965 Budget?

Mr. Davies: This is substantially a matter which will be dealt with by the Financial Secretary in his speech tomorrow, but undoubtedly one of the useful purposes of the Green Paper which has been issued is to allow discussion precisely of this issue.
So our position really is that we are facing a relatively secure overseas trading pattern but with some elements which may give concern, and there is this dangerous tendency to slip into non-competitiveness arising from escalating costs and inadequate productivity.
The sense of watchful non-complacency by which I have characterised my

attitude to our external trading prospects gives way to one of some very real concern in assessing our present industrial performance and outlook internally. There is a tendency to attribute this concern to some kind of pervasive lack of confidence in industry arising from measures said to have been put into effect by the present Government. The right hon. Gentleman the Leader of the Opposition in the course of his rather sour and specious remarks yesterday alluded no fewer than three times to the economy
spiralling down into the deepest recession since the War."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1401.]
and sought to infer, in this rather extravagant language—

Mr. Sydney Bidwell: I am grateful to the right hon. Gentleman for giving way, but when he talks about invisibles to better our overall economic situation and looking for a growth of productivity, would he not require agreements between workers and management in industry, and how does he see excessive tax relief for surtax payers getting that greater productivity in industry?

Mr. Davies: I am bound to say that I do not see this figuring prominently in discussions about attaining greater productivity.
I return to this question of business confidence, and I wish to pin what the right hon. Gentleman the Leader of the Opposition had to say yesterday evening, and the consequences, as he put it, of the present Government's policies upon business confidence. I do not deny for an instant that I am concerned about the inadequacy of industrial investment. I do not deny that I find the rise in the level of unemployment worrying. I do not deny that the disproportionate impact of these redundancies in regions of the country where industrial prosperity is habitually more precarious than elsewhere causes me a lot of concern. Where I differ absolutely from the right hon. Gentleman is in ascribing these disturbing developments to the policies of the present Government. On the contrary, I believe that the policies we are pursuing, reinforced as they are by a Budget fulfilling our promises and powerfully motivating industry to invest and prosper, are


just those needed to reverse the unsatisfactory performance of recent years and to move into a dynamic future. The deficiencies which presently exist are the product of damaging tendencies which are the relic of the former Government's management—or mismanagement—of our affairs, and I shall illustrate how and why. First, industry does not expand and invest without the prospect of profit. I have no sense of apology whatever for maintaining that the pursuit of profit is the primary stimulus of industry and the absence of an expectation of it is the primary cause of stagnation and decline.
There has been for far too long a campaign aimed at denigrating the pursuit of profit and of characterising it as an unworthy objective closely allied to those which the right hon. Gentleman the Leader of the Opposition is fond of describing as the hard liners of industry. Yet traditionally it is the added value related to profit that constitutes the seed corn of industrial prosperity. The generation of added value within the concern is the very basis upon which its continuing expansion and development depend.
Recent years have seen an unparalleled squeeze upon this added value and thereby upon the very resources upon which industry primarily depends to build its future. The trend in the proportion of company profits to total domestic incomes tells its own tale. The proportion was 15·6 in 1964 and was in successive years thereafter 15.1 per cent., 13·4 per cent., 13·4 per cent., 13·5 per cent., 12·6 per cent., and 11·6 per cent. last year.

Mr. William Hamilton: We get a C.B.I. lecture every time. Save us from this man.

Mr. Speaker: Order. Hon. Members must listen to what the right hon. Gentleman is saying. They will get a chance a little later to catch my eye.

Mr. George Lawson: On a point of order, Mr. Speaker. We have listened with great care to what the right hon. Gentleman is saying. Now that he is coming to his partisan peroration he will not even listen to anybody on the other side.

Mr. Speaker: That is not a point of order.

Mr. Davies: I return to the question of the inadequacy of profits which has

characterised the pattern of the last few years. The absolute level of gross trading profits shorn of stock appreciation within this self-same period shows that there was a virtual immobility in the money figures whilst money values were depreciating by about a quarter.
Still more significant are the rates of return on capital employed. The Monopolies Commission makes estimates of such rates of return related to the value of assets at estimated replacement values. Those estimates show a deterioration from the 1964 level to today and competent opinion assesses that rate of return now at much nearer to 9 per cent. than to 10 per cent.—that is, a rate of return which by no means is equivalent to the rate at which funds can be borrowed for investment at present.
This squeeze on profit, coinciding with the dangerous rate of cost inflation that we have experienced over the last 18 months, lies at the very root of industry's disinclination to expand and thereby to provide both the means of national growth and the assurance of both stable and remunerative employment.
Over and above the profit squeeze, the liquidity of companies—the funds remaining in their hands to undertake the investments we so much need—has been hard hit by a wide variety of factors.

Several Hon. Members: rose—

Mr. William Hamilton: Let him read his brief.

Mr. Davies: First and foremost, this self-same inflation has not only aggravated the terms of raising money but has heavily increased the cost of new plant, the requirements of working capital and particularly the replacement values of stock in trade.

Sir Harmar Nicholls: In asking my question I should like my right hon. Friend to know that people who understand the problems and who want to get out of them recognise the sound good sense of what he is saying. It is essential that firms, particularly medium and small firms, should have the liquidity which will enable them to reinvest and re-equip. I believe that the Budget as it stands will help greatly in that direction. However, are my right hon. Friends the Secretary of State and the Chancellor satisfied that


the extra freedom being given to the joint stock banks and greater facility these days—

Mr. Orme: Give way!

Mr. Speaker: Order. There are a great many right hon. and hon. Members who want to take part in this debate, and lengthy interventions are not fair.

Sir Harmar Nicholls: Will my right hon. Friend use any influence he has to ensure that the banks do not increase their surcharge on interest rates, which will more than take away the advantages that are given to industry in the Budget?

Mr. Davies: I will take up that interesting question with my right hon. Friend the Chancellor later. As my right hon. Friend knows, this is a matter which my right hon. Friend made very clear in his Budget Statement he will pay particular attention to in the near future.
The combination of all these events has meant that with steadily less resources generated within industry, a steadily greater proportion has had to be invested in non-productive assets. The implications for productive investment are obvious.
Despite these adverse conditions, the tax burden on industry in recent years has been made ever and ever heavier, once more seriously reducing the cash flow so greatly needed to build the future. Yesterday's Budget came, I know, as a great breath of relief to industry which for the first time in six years started to see the penal burdens under which it had been obliged to labour being relieved. It will have appreciated the further welcome reduction in corporation tax, the halving of S.E.T., but perhaps most of all the firm plans for the restructuring of taxation generally, and especially that affecting companies, upon a simplified, rational and non-discriminatory basis.
Undoubtedly the smaller concerns will also have seen the Budget with a great sense of relief. They had come to regard themselves as forgotten men. They will have seen in a great series of the proposals that my right hon. Friend the Chancellor made the dawn of a new era which I am sure will encourage them to continue to play the part in our industrial life which is so essential to the pursuit of our prosperity.
Turning again to the whole question of company resources, the pattern of corporate saving measured against cash needs for investment, working capital and stocks reveals a situation in 1969 and 1970 of a quite unpredecented kind. The aggregation of all the constraints to which I have referred forced companies into borrowing to the tune of some £600 million in 1969 and double that in 1970, just at a time when borrowing costs were at their peak.
It is these factors that have caused industry to draw in its horns, and it is these factors that it is the express policy of this Government to alleviate, a process to which they have given a notable and confidence-giving impulse yesterday.
I am in no doubt whatever that our present policy directed towards encouraging industry to concentrate upon profitable operations and to abandon the dangerous delusions of investment for investment's sake and turnover for turnover's sake is the right one. I confidently believe that industrial management shares this view and will respond to the conditions that we are now creating. Nowhere is this more true than in the matter of regional development.
What the regions are now suffering is not the inadequacy of differential incentives but the ultimate impact of the profit and liquidity squeeze. Too many of the investments in the regions, both completed and in prospect, were undertaken or projected on too precarious a profit base. When companies are under pressure, as they have been caused to be in the last year by past policies, then it is from the precarious ventures that they withdraw.
The new mood of confidence which I believe our policies, strongly supported by the fiscal and other changes my right hon. Friend the Chancellor has proposed—

Mr. Joel Barnett: What evidence does the Secretary of State have for what he has said? Could he give the number of companies which have withdrawn from precarious ventures in the regions?

Mr. Davies: I have a considerable number of companies in mind. I have no need to name them and do not propose to do so; I do not propose to reveal


what are clearly confidential matters to individual companies. Certainly the new mood of confidence which I believe will come about as a result of the Budget will have its impact on the regions, and it will be a welcome impact.
The Opposition constantly like to make out that they only are responsive to the social and human problems of the regions. This is utterly false. We on this side of the House are deeply concerned about the matters which we would so much like to see remedied, and we believe that they will be remedied. But we know that the ultimate benefit is to be secured only by soundly-based industrial prosperity on a national foundation, giving rise to self-sustaining and expanding investment in the less naturally buoyant parts of the country. This is what our policies set out to achieve. The same goes for unemployment. How wrong it is to infer—

Mr. Dick Douglas: rose—

Mr. Davies: No, I will not give way.
How wrong it is to infer that we accept the growing number of unemployed with indifference and even, as some malicious critics would have it, with satisfaction. But we realise that industrial companies, hard-pressed by profit deterioration and cash shortage, will respond to steadily increasing wage costs by closures and redundancies. We know that the only long-term solution to those problems is by relieving the pressures and modifying the pace of inflation. This is what we have set about doing and what we mean to see through. What my right hon. Friend the Chancellor had to say yesterday was a powerful step towards success.

5.55 p.m.

Mr. Jeremy Thorpe: I am sure the whole House is grateful to the right hon. Gentleman the Secretary of State for Trade and Industry for what can be described as a somewhat unusual speech on the first day of debate on the Budget. I am sure that he will agree that it had as much coverage of Conservative philosophy as it had details of the Budget itself. Speaking from my experience of the very few companies with which I have the privilege to be

associated, I feel that it is preferable that the chairman's remarks are printed, circulated in advance and kept reasonably brief. We accept that the right hon. Gentleman's attitude will be one of watchful non-complacency, to use his own words.
I start with what I hope will be regarded as a non-controversial remark. Whatever may be the arguments about whether the Budget has sufficiently reflated the economy, the Chancellor is sincerely to be congratulated in regard to his personal reputation on a considerable act of reflation. We enjoyed his speech and were grateful to him for the way in which he lucidly presented the facts.
The Budget can be judged in two contexts. First, in its intention to reform and simplify the whole tax system. Secondly, in its ability to tackle the real and urgent problems that face us as a nation. For the first, I can register a good deal of enthusiasm. For the second, I wish I had a greater degree of confidence.
Dealing with the first context, I remember that in many previous Budget debates when my colleagues and I suggested to various Chancellors that we should start the whole process of reform and simplification of the tax structure, successive Chancellors, in a long-term echo of Leaders of the House, said "Not this year." But the right hon. Gentleman the Chancellor of the Exchequer with courage and, I suspect, persistence has overcome much of the inbuilt resistance to change found both in the Treasury and the Inland Revenue and the process of root and branch reform has begun. It must be said in fairness to the Inland Revenue, which has been much criticised, that in 1965, which saw the imposition of capital gains and corporation tax, that department had a formidable task and probably is only just overcoming the indigestion pains. If we can reach a simple and intelligible tax system, that will indeed be a revolution. It will take some years to achieve, but I welcome the fact that the process has begun.
I hope that it will cause the annual Budget to be less than a tribal rite, a sort of pagan festival involving members of parliament arriving at the House before the sun has even risen.

Sir G. Nabarro: Certainly not.

Mr. Thorpe: One hon. Member—and I do not include the hon. Member for Worcestershire, South (Sir G. Nabarro)—arrived so early to claim a seat that that hon. Member's reception of the Budget speech—and I must be very careful following the events of last week in what I say about the demeanour of any hon. Member—was the nearest simulation to receiving its contents in a dormant position that I have seen in this House for many years. As I have said, I expressly exclude the hon. Member for Worcestershire, South, whose resonant sounds from a deep bellied position is appreciated and heard in all quarters of the House.
Dealing with the major reforms—and I say this subject to seeing what the exemptions will be—I personally welcome the introduction of value-added tax and, indeed, was actively canvassing it at a time when, along with their other anti-European sentiments, the Conservative Party gave the system very short shrift. I wonder whether the Chancellor of the Exchequer shares the view of the National Economic Development Council that V.A.T. could be varied regionally since this would be a matter of great importance and interest to development areas. I ask rhetorically whether there is a possibility of exemption beyond those he mentioned yesterday for freight charges by road and rail. This also would be of great significance for the development areas. Further, although selective employment tax is to go—not at a stroke but at a half stroke—will regional employment premium, which obviously was intimately connected with it, continue until 1975 as promised for the seven-year period? Although in that context it is possible to have any regional premium for any tax that is introduced, if the Government had a regional employment premium on value-added tax they would be let off the hook.
I personally believe that the abolition of purchase tax is long overdue. It is an extremely artificial tax which has put up the cost of living. It has involved learned counsel in endless discussion in the High Court as to whether frozen yoghourt is the same as ice-cream and whether Ribena is or is not a medicine. All that rubbish will go.
Likewise, I believe that S.E.T. was one of the most ill thought-out taxes. I

remember the horror with which Labour Front Benchers received the news that agriculture was technically classified as a service industry and, therefore, a special price review was to be expected. The situation was rapidly changed by a new Clause, and agriculture was put on all fours with manufacturing industry. If ever there was a need for taxation to be thought out at more than a year at a time, I should think selective employment tax was the case in point.
It would be interesting to know the extent to which the Chancellor believes that the reduction is S.E.T. will be passed on to the consumer. I know, because reports of private party meetings are usually correct—these are about the only things on which one can get full reports nowadays—that the Chancellor wishes to see it passed on to the consumer. I do not for a moment suggest that that is other than his hope. But when we realise that many of the retail industries will have to absorb the increased costs of coal, electricity, transport and oil, it may be that they will be able to do no more than contain prices as a result of the reduction in S.E.T. Therefore, if the Government are basing their hopes of bringing down the cost of living on the result of halving S.E.T., I believe that they will be wrong, but I hope that I am wrong in thinking that.
I believe that one of the most dramatic changes which is still required in tax, which I hope the Chancellor will look at, though perhaps not this year, is the whole concept of a negative income tax. On the one hand, if we can have those who pay out benefits and, on the other hand, those who claw back benefits, or indeed receive fresh tax, under the same roof, this will be administratively an immense improvement. But in so far as it will help those who pay no tax and, therefore, can derive no benefit from tax allowances, this is the quickest and best way of helping the poorest in the country. It is by these measures that any Government will be seen to have the kind of fairness which they have to prove before they have any hope of getting an incomes policy.

Mr. Idris Owen: Does the right hon. Gentleman agree that the family income supplement goes some way towards what he is suggesting?

Mr. Thorpe: I think I had the privilege of catching Mr. Speaker's eye on that very subject. I shall not repeat the arguments which I put forward then. But the short anwer is "No". If the hon. Gentleman will forgive me, I shall leave it at that and try to find my speech and send it to him.
I obviously welcome the increase in old-age pensions. I confess that it is strange that in a country which claims to have very scientific means of ascertaining information—we have computerisation, and all the rest—these changes should take five months to bring about. I know what I call the "yahboo" argument in which one side says, "Oh, but you took six months and we are only taking five months, so, yah-boo, we are better than you." That is quite a good debating point—at least by current standards. But it seems extraordinary that a reform of this kind, which is highly desirable and about which everyone is in agreement, should take such an interminable time to work through the system. I hope that we can look at it and see how we can step up the computer system or mechanisation or paying-out arrangements.
I welcome the long-term addition changes which the Secretary of State for Social Services announced, which I believe will be for the benefit only of the over-80s. I am informed that for those who regularly receive supplementary benefit in addition to their old-age pension, the long term addition of 10s. will make them very little better off. They are the people we must consider in this Budget.
I regard the reintroduction of the grandfather clause as somewhat unnecessary and regressive, but I must warn the Government that the logic of their argument in this regard is that student grants can no longer be tied to the size of the parents' income.
Concerning death duties, I have no great objection to the raising of the threshold and the ending of the capital income gain which hits an estate twice over. But I should prefer to see a gift tax, which is a much better way of encouraging the distribution of wealth, if that is the Government's aim and intention, although I am not convinced that it is from this Budget. However, I do

them the credit of believing that this is their ultimate objective.
I come now to what I believe is the really crucial point of the Budget, namely, the lack of strategy to deal with the immediate problems facing us. If someone from another country were to find himself addressing the 1922 Committee or any particular committee of the party opposite and were to say, "What are your problems?", I think it would be generally agreed that they are high unemployment, stagnation, low investment and sluggish growth. We have what the late Iain Macleod would refer to as "stagflation". I think the Government would, very honestly, say: "We are in this position. We can go on blaming all these things on our predecessors for the next year or perhaps even for the next 18 months. There may be one or two international events beyond our control, but at the end of that period there will be no more passing the buck. We shall be judged on our record whether we have cured unemployment, whether we have got economic growth, whether we have investment and whether stagnation has ended." I am sure that the Chancellor would agree that that would be a fair test by which the Government are prepared to be judged.
We have at the moment 800,000 unemployed. If Mr. Peter Jay is right, that represents about £5,000 million of potential output which is wasted. The Chancellor has said that existing output would increase by 2 per cent., but he believes that with his measures it could be 3 per cent. That is presumably on the basis of existing employment figures, not brought about by unemployed people returning to work, but on the existing out-turn of the employed population. Therefore, I do not believe that, coupled with the Government's very modest projection of investment in both the public and the private sectors, that will give very much hope, at any rate for the next 12 months, to those who are currently unemployed and, therefore, not able to contribute to the output which this country needs.
The Government constantly and rightly refer to both rising prices and wage inflation, but they have not told us very much about their policy in that regard. I believe—and the country will think this as well—that incantations on the


question of wage inflation are no substitute for an actual policy.
As far as I can see, the only incomes policy which the Government have is sporadic confrontations with individual groups of claimants in the public sector and virtually no policy at all for the private sector.
It is no answer to rising prices for the Government to say, like the preacher with regard to sin, that they are against them. That does no constitute a policy. The Government's Clause 4 dogma is that they are not going to have a policy for prices and incomes, save for the incantations to which I have referred. The test will be whether the Budget is man enough to do the job which is required.
I believe that the Government had a great opportunity of a package deal with the trade union movement. If they had been able to say that here will be no wage freeze—no attempted wage freeze—as under the previous Government, that they want to look after the lowest paid workers by guaranteed minimum earnings, that they want settlements to be increasingly localised at plant level, that they want them, whenever possible, to be tied to productivity, that awards are to be divided between costs which are claimed in respect of actual price increases in the cost of living as opposed to apprehended, with a review clause built in, they could have gone a very long way to getting union support to tying wages more closely to productivity than at present.
The great difficulty that the Government are in is that this Budget does very little for the lowest-paid and the middle-paid workers, and, therefore, it does not increase the Government's chances of getting co-operation but rather makes it more difficult. Likewise in regard to prices. It is no good the Government speaking out like an Old Testament prophet about the evils of inflation. The Government must be seen to be doing much more about it. The abolition of the Consumer Council was not a good earnest of intentions. It will be seen to be one of the most unnecessary and unrewarding economies of any Government for a long time.
When one considers the external operations of this country compared, for example, with those of our European neighbours, one finds that this is still one

of the most highly-protected industrial nations in the world. If we really want to bring down prices and get competition, a little tariff slashing and a few initiatives taken at the next Kennedy Round would do a tremendous amount to assist the consumer.
We shall look with great interest to see in what way the Monopolies Commission is strengthened—whether certain price fixing arrangements, as in Liberal Canada, are to be a criminal offence, or whether the Monopolies Commission will be a lethargic beast which is seldom awakened.
We shall be interested to see how the Government tackle the nationalised industries to ensure that they are more economically efficient. Where practicable, I should like to see nationalised industries subject to independent efficiency audits, with reports subject to parliamentary debate—

Sir G. Nabarro: Rather than going in for independent efficiency audits as the right hon. Gentleman suggests, surely it would be far more effective if Her Majesty's Treasury imposed and impressed on nationalised industries the need for a higher net return on capital employed, as my right hon. Friend suggested should be done in private industry. That means a larger gross profit and a larger surplus before tax. For that to be impressed on nationalised industries would be much more effective than any audit.

Mr. Thorpe: I do not want to digress, but profitability and return on capital are not the only criteria in the nationalised industries. The case for nationalisation is that in many cases the industry is a public service and there is inadequate private capital for the enterprise to be carried on. That, I believe, is the Government's argument for nationalising Rolls-Royce. It is not only the return on capital which is important; it is the commercial judgments that are taken and the commercial efficiency with which the organisation is run. The Select Committee on Nationalised Industries, expanded, could play a great part in that, but independent efficiency audits also have a part to play.
There was no reference by the Chancellor of the Exchequer—and I do not complain—to the position of sterling. This has


once again reared its head in the negotiations in Europe. It may rear its head again when the Basle Agreements are re-negotiated. The Chancellor may find that some of our Commonwealth partners are perhaps not so co-operative as they were before—with good reason. I hope that one of the old-fashioned trappings we shall throw off—and I know this will horrify those who are of a very conservative point of view—is the incubus of sterling as a reserve currency. If we cannot have a floating pound, I hope we shall consider the concept of the crawling peg, and move towards a European reserve currency. This problem has bedevilled the economy of this country ever since the Second World War.
I welcome the long-term tax reforms. I congratulate the Chancellor and wish him luck in those reforms, but I am pessimistic about the lack of initiative in the Budget to tackle the problem of prices, incomes and investment. The Chancellor has convinced his colleagues that the horizon is bright, but I hope he has not deflected their gaze from the many rocks which are still around us. Some of them are clearly visible—the unemployed and the cost to the housewife in the shops. Some of them are submerged but no less dangerous. Mr. Sam Brittan was right to say in the Financial Times this morning that there is a fear that the present payments surplus will run off, repeating the train of events which led to the last devaluation. If that happens, it will indeed be dust in our mouths, and it will be a taste that this country has savoured all too often.

Several Hon. Members: rose—

Mr. Speaker: Order. I wish to inform the House that nearly 50 hon. Members want to speak. That means that, even with the two extra days available, we move along with four or five speeches to the hour all the hon. Members who wish to speak will not be called.

6.6 p.m.

Mr. Boyd-Carpenter: Both the right hon Member for Devon, North (Mr. Thorpe) and the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) by implication referred to the Budget having had an extremely good and enthusiastic reception in the country. Indeed, the right hon. Member for Stechford when he quoted the late

Ian Macleod's admirable observation about all Budgets that seem good in April seeming bad in July, raised in the minds of many of us the riposte that the right hon. Gentleman's Budgets looked awful all the time. Public opinion has been enthused and excited by the reversal of the tendency of many years for Budget day to see increased impositions of taxation upon an already overtaxed community. There has also been an almost incredulous surprise to see a Government actually doing the things they said they would do and which they were elected to do.
The quality of the Budget was perhaps best demonstrated by the pathos of the efforts of the right hon. Gentleman the Leader of the Opposition yesterday evening to find any holes to pick in it. All he could say, in an attempt to coin a phrase, was that it was a Budget for a Bourbon. Although nowadays he is a distinguished writer, he is not an historian or he would have recalled that apart from giving their name to an agreeable biscuit the Bourbons' main claim to memory is that they had the gift of remaining in power for a very long time. It may be that subconsciously it was that aspect of this distinguished dynasty which was in the right hon. Gentleman's mind in a speech which it would be kind for us to forget but which he may find difficult to do so for a little time.
The right hon. Member for Stechford thought that the Budget was socially divisive, and he spent a good deal of time referring to the effects of the remission of taxation on various people with fairly high incomes. It is an inevitable consequence of a highly progressive system of taxation that when the time comes to give relief the quantum of relief shall be the higher in respect of higher earnings. That is the inescapable consequence of imposing disproportionately large increases upon the higher earners. The right hon. Gentleman referred to people with incomes of £50,000 a year. There is progress in this House. You, Sir, will remember that the late Mr. Gaitskell took exception, on a previous Conservative Budget, to the effect that it might have on a bachelor with an unearned income of £100,000 a year. [Interruption.] Obviously, women with marriageable daughters would certainly ensure that that state of affairs did not endure for long.


It is not a fair debating point in considering amendments in one of the most—perhaps the most—progressive system of taxation in the world to make the criticisms which the right hon. Gentleman made. It also revealed a considerable change in his own attitude.
The House may remember his Budget speech two years ago, when he went out of his way, when introducing an admittedly difficult Budget, to refer to the possibility at least that high levels of taxation on high earnings had a disincentive effect. He went on:
I have come to the conclusion that, desirable though such a reduction would in many ways be, I must concentrate this year on more vulnerable sections of the community. I would emphasise, however, that I regard an increase in one of the earned income allowances as a high priority for a later Budget."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1031–2.]
This is indeed one of the things which my right hon. Friend has done and therefore has taken somewhat less in taxation from the high earners. It is a major factor in that change.
It is a little curious that the right hon. Member for Stechford, when Chancellor, understood the ill-effects of very high—uniquely high—levels of taxation on the higher earnings, but forgets all this when he comes into Opposition, and seeks to make points which I think unworthy of a right hon. Gentleman of such intellectual distinction when he happens to be in opposition and finds it difficult to find a criticism to make of the Budget—

Dr. John Gilbert: rose—

Mr. Boyd-Carpenter: The hon. Member is not the right hon. Gentleman to whom I was referring, but perhaps he anticipates for a moment. In the light of Mr. Speaker's warning, I must get on.
The main purpose of this Budget is to improve Britain's economic performance, to achieve a better rate of growth and a higher level of industrial investment. The House will remember that the rising levels both of individual standards of life and of social provision which we saw under the previous Conservative Governments were founded on just that, on high—it was not high enough, but it was higher than it has been since—industrial investment and steady economic growth, and this Budget will be judged in due

course by the contribution it makes to that better economic performance, as so defined.
In that context, I very much welcome the improvement involved in the reduction of corporation tax. It will help the cash problem of many companies and it will leave them greater freedom either to finance investment out of revenue or to use their funds in the most economic way possible.
I was delighted at my right hon. Friend's proposal for the future to eliminate the discrimination which the tax at present imposes against distributed profits. It seems quite wrong that the difficult decision which every company has to make from time to time as to whether to make an additional distribution or to use additional profit in other ways, should be determined by tax considerations. It should surely, in the interests of the economy, be determined by the judgment of the company as to the most efficient and effective method of using those funds.
Indeed, I believe that the attention of those controlling industry and commerce and of many people outside as well has been excessively, though inevitably at recent rates, concentrated in recent years on the tax consequences of what they do, rather than on the economic viability of their decisions. If my right hon. Friend carries this through, as I am sure he will, he will make a great contribution to greater economic efficiency.
I was delighted to hear my right hon. Friend's announcement about selective employment tax. I must, I suppose, declare an interest. As the House knows, I am chairman of an insurance company which earns a good deal of foreign exchange, particularly in the marine and aviation markets. Every one of our company's employees makes on the average a probably higher contribution to the British balance of payments than workers in almost any other industry. Yet, under this impost devised by right hon. Gentlemen opposite, under the guidance of impractical academic economists, the tax fell in full on them while it was refunded to any manufacturer, even if he were a manufacturer of gaming machinery, for the home market. [Interruption.] That was a distortion of the whole economic process. I am delighted that my right hon. Friend will be able to get rid of half


of it this year, and that the other half will follow it shortly. One of my hon. Friends just observed that it is what one might call the operation of a two-stroke engine.
These are the important matters bearing on the working of the economy. I should now like to say a word about the announcement about pensions and social benefits. If my right hon. Friend will allow me to say so, it was a pity that this was included in his Budget speech. I know that there are precedents for it, and it may also be known to some people that there would have been more precedents for it had objection not on certain occasions been taken.
National insurance is a separate, largely self-financing operation, and although it has some budgetary consequences—its effect on consumption, the Exchequer contribution and so on—it is a pity to blur it by introducing it in a Budget. Indeed, inevitably, my right hon. Friend yesterday could not give the vivid picture of what was being done which my right hon. Friend the Secretary of State for Social Services gave this afternoon. I hope that when future improvements are made they will be made and announced separately by the responsible Minister and not confused in the general Budget discussion. Having said that—

Mr. Tam Dalyell: Is not the contributory element being used as a straight tax, and is it not therefore particularly appropriate to include it in the Budget?

Mr. Boyd-Carpenter: I must not anticipate my speech or that of the hon. Member on the National Insurance Bill which is to come forward. What I am saying here is that I think we would get a better presentation if it were separately presented as a separate social operation.
I am delighted at the substance of it, particularly—I tried to say this in a brief intervention when my right hon. Friend made his statement—at the forward move in respect of the treatment both of invalidity and of extreme old age. This is a very good package which will, I think, be enthusiastically accepted throughout the country.
As to the date of operation, to which the right hon. Member for Devon, North referred, there are real social advantages

in making improvements in social benefits just before the onset of winter. Those who have studied this problem know that the impact of colder weather on the poor and the old is severe, and that, therefore, if social improvements are timed just as the colder weather is coming, more help is perhaps given at the moment when it is needed.
Quite apart from the magnitude of the operation—as one who had to undertake it three times, I have no illusions about it—the timing of this, I think, is right. Of course it is better than the pledge given by my right hon. Friends, which I think would not have involved the improvements taking place until November. At any rate, we shall have a chance to discuss this on another occasion.
I want now to deal with two tax points on which I want to urge certain things on my right hon. Friend. Even with the Budget, from the tax point of view we in this country treat widows very badly indeed. In life—and even my right hon. Friend's announcement yesterday only partially modifies this—the Revenue treats them as one with their husbands, but as soon as the husband is dead the Revenue treats his property in the same way as if it were passing to anybody else for the purpose of estate duty.
In human terms, when a woman has just been widowed, apart from the emotional aspect with which most of us are, unhappily, familiar, she loses her husband's earnings; and such pension as she may get is undoubtedly a great deal less than the amount to which she has been used. At that precise moment the State steps in to levy a tax on what he may have left her, including the family home. This is socially the cause of much understandable bitterness.
If my right hon. Friend were to accept a suggestion which has been made before —I do not claim that it is original, though I strongly support it—which is that the incidence of estate duty should be postponed, when a husband leaves property to his wife, until she dies, much social trouble and harm would be obviated. Although the Revenue would be kept from its money for a little while, it would get it in the end.
I hope that my right hon. Friend, who has shown much sensitivity in many of the changes he has announced, will pay


attention to this point. I do not think the cost, even in the short-term, would be prohibitive. In the long-term it would be very little and it would give relief to people who, at the very moment when they are down, feel that the whole force of the State and Inland Revenue is concentrated on attacking them.
My second point relates to capital gains tax. My right hon. Friend has given some relief in respect of the short-term tax. I am bound to say that the short-term tax, which was introduced by a distinguished Conservative Chancellor, is socially a great deal better and more justifiable than the long-term one, which was introduced by a Chancellor from the benches opposite.
I have always considered reasonable the provision that a gain resulting from speculation should be as taxable as a gain derived from work. However, in an era of long-term inflation, the long-term tax operates quite differently. It operates on money values and, therefore, in respect of both Stock Exchange securities and chattels, one can have the unfair situation that something which has not risen in value in real terms but which has only maintained, or even lost, a certain amount of its value in real terms, because of the passage of years and inflation, goes up in money value and is therefore subject to tax when it changes hands.
This is a kind of modified capital levy. It must be, particularly in relation to chattels, extremely difficult to operate administratively. How my right hon. Friend's officers can decide what a picture sold today was worth in April, 1965, with all the changes that have occurred in the value of pictures on the international market, I do not know. This must involve an enormous amount of work, including a considerable amount of guesswork.
I wonder whether some alleviation of the long-term tax is not more urgently required than the modest alleviation of the short-term tax which my right hon. Friend has provided? I trust that he will consider this point. One hopes that the present inflation will be arrested, but we are living in an era when, as part of the broad sweep of the century, there must be a measure of inflation. That being so, a tax based simply on an

increase in money values must necessarily be unfair, and, I suggest, could have a marginally damaging affect on savings.
Having made those points, I again congratulate my right hon. Friend on presenting a Budget which has given a lift to the British people and has provided the kind of stimulus which was needed. This people has suffered a good deal in recent years. It has been a long haul since the war. Hopes have been aroused but disappointments have followed. No doubt the economy still has a long way to go before it is secure, firm and prosperous. However, in what will still be a long and hard struggle, yesterday afternoon we saw for a moment the first gleam of victory.

6.25 p.m.

Mr. Ernest Armstrong: My brief intervention will be concerned solely with what I regard as the most serious omission from the Budget Statement. I refer to the lack of any reference to the necessary aid that is required for the development areas.
The Chancellor stressed that the reflation which he was modestly permitting was designed to deal with the disastrous trend in unemployment, and hon. Member on both sides are agreed that Budget strategy must be related to the general economy and the need to reduce unemployment.
I was, therefore, shocked at the lack of any mention of the development areas, for it has also been accepted by both sides that when we refer to the problem of unemployment we are really referring to the problem of the development areas, in which the rate of unemployment is always much higher than the national average.
It was with some interest, therefore, that I heard the Secretary of State today refer to regional policy and the development areas, though, frankly, he rather frightened me. He asserted a philosophy which was one of the major causes of the depressed area status that was achieved before the last war.
He said that he did not have much faith in differential incentives, and that a strong economy, allied to good profitability, was the real answer to our regional problems. I do not deny that one cannot solve the problems of, for


example, the Northern Region, in which my interest is centred, without a strong national economy. However, I warn the right hon. Gentleman that our experience is that, apart from market forces, there must be a committment by the Government to the regions, and particularly to the development areas, before industrialists will be prepared to invest in those areas.
On 8th March last the rate of male unemployment in West Durham was 9·1 per cent., despite the fact that the whole of my constituency enjoys, if that is the word to use, special development area status. The special development areas were established towards the end of 1967 so that areas which had suffered severe pit closures might compete on favourable terms with other parts of the development areas. Nevertheless, we have new empty advance factories because we cannot find tenants.
Redundancies are taking place in the established industries, mostly in the older basic industries that are running down, and in the County of Durham over 5,000 redundancies were declared in the last six months of 1970. There is a complete lack of confidence throughout the region.
This has nothing to do with political parties or anything else. It concerns industrialists, local authorities, trade unions and so on. It is interesting that we have heard various figures today and talk about equality and so on. In a reply from the Secretary of State for Employment, which I received only a fortnight ago, he indicated that in the Northern Region there are 21,200 men over 21 who work a full week and whose gross pay is less than £15. Those 21,200 men are the breadwinners of the family, in the main. In the light of some of the figures given about tax remissions, we have heard talk about restraining wage claims and dealing with cost inflation when that £15 a week is just over half of the average national industrial wage. To talk of a booming economy and letting the market forces work as a solution to the problems of the Northern Region shows abysmal ignorance of what has happened there and the present needs of the region.
Yesterday the Chancellor was the prisoner of some very irresponsible state-

ments that the Prime Minister made during the election campaign. When the Prime Minister came to the Northern Region he spoke about the waste of the central Government's resources for the region. In the six years of the Labour Administration about £1,000 million was injected into the Northern Region. The Government have persisted in declaring that this money was largely wasted.
I should like to mention two statements which do not come from political friends of mine. Sir James Steel, who is the chairman of the Washington Development Corporation and a very able industrialist, which no one can deny, made a very interesting speech to the northern Stock Exchange just before the last General Election. He said that in the Northern Region, because of the efforts of central Government, we will soon have the best road system in the whole of the country. So many people—and this is true of statements from the benches opposite—underestimate what has been done by the efforts of central Government in the Northern Region. In 1963, 60 per cent. of the men at work in the Northern Region were employed in the heavy basic industries that, in the main, are declining. In 1970 66⅔ per cent. of the hourly-paid workers in the Northern Region were employed in the new modern industries, the industries that have growth potential. This is a basic restructuring of industry in the Northern Region which was paid for by the resources that were being pumped into the region because the previous Government believed in regional policy.
In an article in The Times, Peter Jay, who visited the North to study the consequences of the changes in incentives that were brought in by the present Government since the election last June, said:
… a new crop of doubts and anxieties have beset the region. This is particularly hard on the North when it seemed to be surmounting the problems of poor communications, radical industrial transformation and pit closures in recent years.
I draw the attention of the Secretary of State to his following remark:
A positive advance has begun. It is the preservation and continuity of that advance from the North's new sounder industrial base that is now in jeopardy.
Those doubts are shared by industrialists in every section of the


community in the Northern Region. Yesterday's Budget does nothing to remove those doubts. There was not one contribution which would help people in the north to regain confidence.
My second point about regional policy is that if we are to have industry on the move and the kinds of investment which we need in the North, we must have clear, credible policies which are easily understood, with continuity assured. After the Secretary of State's speech, we need reaffirmation of a commitment from the central Government on regional policy. I wonder whether it is true, as the Sunday Times reported, that it was a confidential report which the Government asked for when they came into office that deterred them going any further in their regional policy. I am sure that the Secretary of State knows what I mean.
The extension of special development area status from those areas hardest hit by pit closures, including West Durham, to the whole of Tyneside and Wearside will do little to help those areas. They need different incentives and commitments. It will certainly harm West Durham and similar areas. Now that the margarine, which was never more than poor class margarine, has been spread so much more widely, it acts to the disadvantage of areas such as mine, where at least the special development area incentives were an asset and advantage. Therefore, it seems that this extension, which was done piecemeal and as a panic measure, will help very little any part of the Northern Region and will seriously put at a disadvantage the area which I represent.
Finally, to inject resources into the region is not charity. It is not dole. It is good economic sense. We heard earlier today pleas from Members representing the City of London and Greater London areas for Government expenditure to relieve congestion, for motorways, for investment in the tube and so on. There is a terrific strain on all the social capital in the south of England. In the North, we have social capital unused and a labour force that is adaptable and has proved to be so in recent years. Therefore, this significant omission is not only a slur on our region but economic nonsense. It would be much wiser for the Government to give another commitment

to the regions about development in such areas as I represent, because in the long run it is in those areas that we can secure the economic growth which the country desperately needs.

6.38 p.m.

Mr. Christopher Tugendhat: It is a happy chance that I should be called after the hon. Member for Durham, North-West (Mr. Armstrong), who referred to London and the City of London. I am delighted to say that I agree with the need for pouring more money into the regions as and when the economy is able to permit it.
This is my first Budget as a Member of the House. Before coming here I was a financial journalist and covered a great many others. My experience has always been that Budgets tend to be forgotten quickly, after the euphoria and excitement of their presentation. However, on this occasion I have a suspicion that the Budget will remain in the memory a great deal longer.
This Budget, like Lord Butler's Budget after the 1951 General Election, marks a turning point in the country's post-war economic history. It represents a fulfilment of a great number of pledges which we gave to the country. For a variety of reasons, I appreciate that a fulfilment of our pledges must come as an unpleasant surprise and experience to hon. Members opposite. The Budget is the result of a General Election in which we put our ideas to the people, they approved them, and we have acted. It has the three main characteristics of a Tory Budget. It is a Tory Budget and one to be proud of. It has the three characteristics of a Tory Budget. It reduces taxation. Taking the mini-budget with this one, taxation in the corning year will be reduced by £951 million. As a journalist writing about past Budgets, I remember how one wrote in each of the Labour years about the massive increases in taxation which had just been put on, and I envy my successors who have an opportunity to write about reductions.
The second characteristic of a Tory Budget is that it reforms. This Budget is launching what is probably the most enormous reform programme in our taxation system since Mr. Gladstone himself.
The third characteristic of a Tory Budget is that it helps all sections of the community—[Interruption.] Right hon. and hon. Gentlemen opposite do not like to hear it, I know. It helps pensioners, families, savers, wage and salary earners, and industry and commerce. The whole country will be better off and better run as a result of this Budget.
My right hon. Friend the Chancellor of the Exchequer covered such a wide area that it is impossible for an hon. Member on the back benches to do more than dwell on one or two of the points that he mentioned. I shall pick out two, and then I shall take up two of the points made by the right hon. Member for Birmingham, Stechford(Mr. Roy Jenkins).
The first point that I take from my right hon. Friend's speech will be received by right hon. and hon. Gentlemen opposite, unlike most of my speech so far, with assent and agreement. One of the most interesting features of this Budget is that it represents a major move towards open government. Right hon. and hon. Gentlemen opposite, especially those with experience of government, will agree that the Budget mechanism is a very unsatisfactory way of introducing major changes in our taxation system. Because of the tradition and the panoply of secrecy surrounding it, great reforms tend to be thought up in the Civil Service and introduced without adequate consulation with expert opinion among the professions and others involved outside this House. Over the last few years, one has seen a divergence of British practice from that in overseas countries, where major reforms are discussed before they are introduced, whereas here they are introduced with inadequate discussion. One saw this with the S.E.T. and the corporation tax. Regardless of one's view of these taxes, they were introduced in what might be called an unfinished state, and much time and trouble had to be devoted to improving them after their introduction.
I am sure that the House will welcome the two Green Papers on the value-added tax and the corporation tax. I am sure, too, that everyone will welcome the decision to consult all the relevant authorities, both inside and outside Government, on the possibility of changing the instruments of monetary policy. Also to be welcomed is the fact that a long time

will be left for the reform of direct taxation, since this, too, involves many highly complicated and difficult considerations.
This is a desirable reform to which all Governments would be wise to adhere. By taking the public more into their confidence at an early stage in the preparation of legislation, Governments will be able to make good measures better and, to some degree, mitigate the effects of bad ones.
My second point concerns savings and investment. We are a capitalist and free enterprise society. The trouble in the past has been that too few people have had a share of the capitalism and an opportunity to embark on the free enterprise. I very much welcome the immense incentives that my right hon. Friend has given to people to save more and to be more independent in the management of their lives as a result of being able to save more. I welcome particularly my right hon. Friend's decision to exclude small capital gains up to £500 from capital gains tax. It has always struck me as absurd to suggest that people should endeavour to save money out of their wages and salaries and then to take away most of the gains that they made. The decision to exclude small capital gains up to £500 is a thoroughly desirable proposal which will benefit a great many people in the community.

Sir G. Nabarro: I endorse completely all that my hon. Friend says. Will he now agree that the Conservative Party should take the logical next step, which is to honour the undertaking given by my right hon. Friend the Prime Minister in 1965 that capital gains duty would be removed from any increased value of unit trust units?

Mr. Tugendhat: Yes, and I very much hope that that will be done. Any measure which benefits the unit trust movement also benefits small savers to a great degree.
The other proposal in the Budget which will benefit small savers is the abolition of the short-term capital gains tax. It has always seemed to me to be right that capital gains should be subject to taxation, but it has seemed quite wrong to distingish between short-term


and long-term gains. It is usually the small person without the opportunities of large institutions and the richer members of the community who find it difficult to wait before realising his capital gains, and the tax on short-term gains has borne especially hard on the small man. He also finds it harder to look twelve months ahead than the large institution and the rich man, and again the short-term gains tax has borne especially hard on the great mass of the population.
In terms of direct taxation, my right hon. Friend has taken a great step forward in removing some of the discrimination against investment income. For all those reasons, the great mass of the population stands to benefit enormously from what has been done.
I turn, then, to the speech of the right hon. Member for Stechford. I said that I proposed to take up two of his points, and they are corporation tax and surtax. He said that he did not think that, after time for reflection, the Labour Party would approve of the direction in which the Government proposed to go in the changes in corporation tax. I was a little surprised to hear that, even though in its present form the corporation tax was introduced by the Labour Government. It must be common knowledge that the tax flew in the face of all contemporary European practice and of all expert opinion in this country. People overseas and experts in this country are by no means always right. Equally, the Labour Party is not always wrong. But it is significant that the tax flew in the face of expert opinion at home and overseas, and I am sure that it is right that the balance as between retained and distributed profits should be altered. By discriminating against distributed profits in the way that the tax does at the moment, it leads to the survival not of the fittest but of the fattest.

Mr. Robert Sheldon: The hon. Gentleman really cannot get away with that. He must be aware of the van den Tempel solution, which is a copy of our corporation tax and is very much admired on the Continent.

Mr. Tugendhat: I confess that I have not read the whole of Professor van den

Tempel's report. Indeed, I recall the Shadow Chancellor saying somewhere that he had not, either, though I may be wrong about that. However, I cannot agree with the hon. Gentleman's interpretation of it. Throughout the Community there are different systems, but all of them follow precisely the opposite principle to the one introduced by the Labour Party. The changes that my right hon. Friend is proposing will bring us more into line with Professor van den Tempel than our present practice.

Mr. Barnett: Let us get this clear. Professor van den Tempel sets out and the Common Market Commission recognises what he calls the "classical" system, which is the system that we have at the moment.

Mr. Tugendhat: My impression was that he set out a great many different things, but certainly he favoured the principle which exists in the Community and which we intend to introduce here.
Regardless of Professor van den Tempel, it seems to me—

Several Hon. Members rose—

Mr. Tugendhat: I will not give way; I think that Professor van den Tempel has intruded far too much into the debate. The Labour Party ought to invite him to address its finance committee and we could then get it absolutely straight before the next Budget. I wonder how many Labour Members would actually go to listen to him!
I was saying that the present corporation tax system leads to the survival of the fattest and not the fittest. It deters companies from spending money and then going to the market to raise more, and it makes it much harder for the young and dynamic company which is expanding rapidly to obtain money from the market.
The second point made by the right hon. Member for Stechford worth taking up is the whole business of surtax and people at the upper end of the income scale, a subject which seems to have brought much mirth and hilarity to Labour Members. Again I was surprised by what the right hon. Gentleman said. I remember very clearly from having had to write about it in the past, that in his previous Budget speeches he was always saying how much he hoped to be able


to do something for surtaxpayers, that the level of tax on high incomes was too high, and how he hoped to be able to do something about it. It was a matter of great regret to me that in his Budgets he was not able to do something about it, and no doubt if he had been the Chancellor of the Exchequer still he would have remedied that in this Budget, but he is not and it has been left to us, as in so many other matters, to do it.
It is unjust for the State to take so much of a man's income as we have been taking in this country, and that is one of my reasons. The other is that although, as hon. Members opposite have rightly said, this will benefit only a relatively small number of people, they forget that that is because our level of direct taxation on high incomes has been so high that it has resulted in incomes at high levels in this country being greatly depressed as compared with corresponding incomes in other countries.
A most interesting report was done by, I think, Associated Industrial Consultants last year showing that over a wide range of jobs in this country in the upper levels of management British salaries were only about 60 per cent. of those for comparable jobs on the Continent. This is not surprising, because when people are taxed at the very high rates which we have been applying, it is absurd for companies to pay as much to them as would be paid on the Continent, because they might as well make a gift of the money to the Exchequer, as it clearly does not go to the executives.
Altering the system in the way proposed will result in a considerable increase over the years in the salaries of all executives. By raising the ceilings, we shall create the opportunity for people at all levels throughout industry to get more money, because the levels throughout industry are set by salaries at the top. This is a reform which the right hon. Gentleman himself intended to introduce and, although it will benefit only a small number of people, it will have beneficial long-term effects for very many.
That is all I wish to say beyond observing that the Budget has done much to lift the spirits of the country and to impress everybody with the Government's sense of purpose.

6.54 p.m.

Mr. Neil McBride: The hon. Member for the Cities of London and Westminster (Mr. Tugendhat) brings the view of the City to the House when he says that the benefits of the Budget are widely appreciated throughout the country. I bring a totally dissimilar view, in that I believe that most people do not agree with him. A sense of social purpose has to be seen in a Budget, and in two respects this Budget has no sense of social purpose.
It is appropriate for the Secretary of State for Trade and Industry to be here, because I wish to refer to his Department, but before doing so I want to deal with the increase in old-age pensions. Pensioners are not part of the capital-owning democracy and the increase in pensions will be eroded by rising prices almost before it is granted. The leader writer in the Evening Standard today castigates the Prime Minister for his inability to devote attention to rising prices. As my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) said, the increase in the pensions will only restore their purchasing power to the level of 1969, a poor return for seven million old-age pensioners, who will remember the Tory Government.
The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said that the coming of the colder weather was a good time to increase pensions. I ask him to ponder that the increase to a single person will be offset by the cost of one bag of coal this winter. The increases will prove two things: first, that the Government have no concept of how pensioners live—how they exist would be a better way of putting it—and, secondly, that this large section of the population will slip back still further in its attempts to secure a decent standard of living. Pensioners ask only for decency; the Government had a chance to give it to them, and it failed to do so.
There is no sense of social justice when the increase in the pension ignores the fact that pensioners are the "have-nots" in Britain. A national official of the National Association of Old Age Pensions Associations recently said that one pensioner living alone had the same costs as a married couple. The increase for


a single pensioner should have been more than £1 and married couples should have had more. This large section of the population has invested all its working life in the United Kingdom and it has received a poor return from the worshippers of good investment, the Government.
The increase from 20th September ignores the plight of a great body of consumers. Prices are undeniably rising steeply and by 20th September the value of the increase will have been whittled away. Pensioners will contrast their treatment and their needs with the rest of the Budget's proposals. How can the Government reconcile the give-aways at the top end of the scale with the increases accorded to the pensioners? A pensioner has to purchase his loaf of bread in the shop where I buy mine. Can we not do better for him? The dividend which old-age pensioners receive for their life investment in the business which is Britain is very poor, and I ask the right hon. Gentleman to think again.
The imminent value-added tax will add to the plight of pensioners. It means the addition of a percentage at every stage of manufacture or processing. It will affect travel, clothing and a multifarious range of other things which everyone needs, including pensioners, in a society such as ours. The whole range of services will be increased in price. The cost of living will rise, and inevitably the standard of living of those with the lowest incomes will be depressed. The old-age pensioners' concept of tomorrow's horizon is not of something several months away. Because of their age and needs we should give them the best we can. The need is urgent, and they should have the increase now, not on 20th September.
The Chancellor referred to expenditures in his speech. We must consider all the range of prices that the consumer has to pay in making those expenditures. We must take the Budget of 27th October with yesterday's Budget. All the euphoria has gone now; the scenes of wild acclamation are a thing of the past. The Secretary of State for Social Services was most efficient in applying the cold douche this afternoon.
In talking of consumers' expenditure in his Budget speech, the Chancellor

failed to say anything about protection for the consumer. He referred to the Crowther Committee's Report on consumer credit. Consumer credit is a vast industry, as people live very differently from the way in which they lived a couple of generations ago. As the Report states, the law on it is chaotic and must be brought up to date. The consumer has the right to know the rate of interest on his loan or hire purchase agreement. The terms fluctuate. In conclusion No. v in the summary of conclusions in Chapter 7 of its excellent Report, the Committee favours the appointment of an independent official answerable to the Secretary of State for Trade and Industry
To act as an Ombudsman in the area of consumer credit;
Such an appointment is long overdue.
As the Leader of the Liberal Party, the right hon. Member for Devon, North (Mr. Thorpe) said, it was an act of crass stupidity, of cheeseparing economy, to axe the grant to the Consumer Council. The housewives in the main form the largest section of consumers. I believe that they would be willing to pay a small price for the independent protection of their interests, which they no longer have. It is regrettable that there is nothing in the Budget to provide for this. Perhaps the Chancellor is oblivious to the importance of consumer protection. He cannot ignore the extent to which efficiency depends on consumer strength and pressure. He forgot that in the United States, Canada and Scandinavia, Government funds are becoming increasingly available to organisations working to protect and advise the public.
The Conservatives always say that competition will stabilise prices, but that is a canard in these modern times. Dame Elizabeth Ackroyd, who was Director of the Consumer Council, has said:
Competition will not work in the interests of us consumers unless we are equipped to get the most out of it: equipped with information about the goods we buy, equipped to weigh up advertising claims and promotion offers, to stand up against high pressure salesmen and to assert our rights when we get bad goods or bad services.
That shows the need for an independent agency. The Consumer Council did a magnificent job with the money with which it was provided. An independent agency could also look after the surveillance of prices of credit, goods and


services, and the maintenance of quality standards. Sixty hon. Members have joined me in signing a Motion to that effect.
The Minister of State should tell his right hon. Friend to think again about the absence of any reference to the restoration of the grant to the Consumer Council. One thing that no Government can ignore is public opinion. Here the Government are acting, and have acted, contrary to public opinion. In Sweden the office of consumers' Ombudsman came into operation in January. Surely Britain can imitate Sweden?
The other night, broadcasting on radio from London, I said that it was the interests of the little people, figuratively speaking, that I wanted to protect. They want someone to turn to who will protect their interests. The removal of the grant from the Consumer Council, thus ending its activities, pinpoints the need. The balance of power is now weighted in favour of traders. Therefore there is a need for legislation to create a Parliamentary Commissioner for the Consumer. Traders and manufacturers have their trade and professional associations, expert advisers, public relations officers and a whole range of assistance denied to the ordinary consumer. There should have been provision in the Budget for such a Parliamentary Commissioner. If the Chancellor talked about expenditures he should talk about the consumer who makes them. Overall supervision is necessary here. The big battalions of the law, through the trade associations and so on, will work hard to protect the traders and manufacturers. An independent agency to protect the interests of the consumer should therefore be created. How can consumers be expected to know about new methods of presentation, marketing and selling techniques?
The omission of any intention to restore the grant could be rectified. Expenditure on it had cost the taxpayer a penny per head per year. It was £240,000 annually, a drop in the bucket. There are some rapacious traders—I am not attacking a huge body—and the consumer must be protected against them. The consumer needs an independent agency, a consumer's Ombudsman, to investigate his complaints. The last annual report of the Consumer Council said that 400 individual complaints were made to it,

although it had no power to deal with them. That gives an idea of the volume of work in this connection. The Council covered many aspects.
The Government are bent on entering the Common Market. There is no real provision in Europe for consumer protection. The Economic and Social Committee there consists of representatives of producers and farmers, many community groups and consumers, and the French representative on the Comité Comtat has already expressed concern at the lack of consumer representation from Britain. We must closely consider, with the prospect of our entry into the Common Market, the lack of Government-sponsored consumer protection organisations in Britain. The Government should repair this omission and afford our consumers the protection that they demand by appointing a Parliamentary Commissioner to watch consumer interests.
Social justice, like justice in the courts, must be seen to be done and in the case of the pensioners and in the case of the consumers it is not being seen to be done. It is the bounden duty of the Government to bow to public opinion and do something about both.

7.11 p.m.

Mr. R. H. Turton: The hon. Member for Swansea, East (Mr. McBride) was quite right to draw attention to the fact that the spiralling inflation over the last two and a half years has hit old people extremely hard. One of the most welcome aspects of the Budget is the Chancellor's measures to increase tax relief for old people with moderate incomes and to increase the retirement pension. This Budget is a landmark. For the first time we are making pensions higher for the very old. It is a policy which I and others have advocated for many years; my right hon. Friend has taken only a small step this time. In general the Budget must be judged by how far it will tackle the problem of breaking this country out of the stagnant lack of growth which it got into over the last few years of the Socialist Government and by his measures to tackle the problem of inflation.
Yesterday, an hon. Member asked me how many Budgets I have listened to. Allowing for absence during the war and


taking into account the fact that some Chancellors have had more than one Budget in a year, this must have been about the fortieth Budget I have heard. I can think of no Budget so distinguished by its clarity, its economy of language and its modesty. I thought that it was magnanimous of the right hon. Gentleman the Leader of the Opposition to describe the Chancellor's speech as a superb form of presentation. All of us agree that he acquitted himself in a way to make us proud of him. I am particularly glad of that as a Yorkshireman, because I like to see a fellow Yorkshire-man do well in the House. The whole House and the country will congratulate my right hon. Friend.
The very dynamism of my right hon. Friend's proposals exposes the out-of-date and restricted scope of the House of Commons procedure for dealing with taxation. The Leader of the Liberal Party correctly talked about it as a ritual process. After the ritual orgy in the spring and the hundreds of thousands of words pouring out of hon. Members in the following three months about finance, the House goes completely mute on the subject while the Chancellor again withdraws into purdah until the daffodils grow in the spring and we get again the seasonal urge to talk about taxation. Surely this is a complete nonsense and it is now time, just as my right hon. Friend is reforming the system of taxation, for us to reform our procedure.
My right hon. Friend announced proposals stretching over three years. When the Select Committee on Procedure was taking evidence on the scrutiny of taxation in the last Parliament, the Treasury memorandum, for which, I suppose, the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) was responsible, said in paragraph 9:
Because, therefore, no Government can present its proposals on taxation as much as three years' ahead, it would be unprofitable for any Government to open itself to examination about its long-term thinking …
on taxation. But this is the very thing which my right hon. Friend has now done. This leads to certain considerations which I want to put before the House.
I am Chairman of a Select Committee which has put a number of suggestions

about which we are still awaiting the reaction of the Government. If the Chancellor is able to deal with the problems of taxation three years ahead, why cannot Parliament do the same? Why cannot committees of the House look forward into these projections? Yesterday, my right hon. Friend produced two Green Papers. I noted with interest that he said their purpose was to provide a basis for consultations with trade and professional bodies. Surely the object of Green Papers should be consultations with Parliament.
What are the Government's proposals regarding the recommendation of the Select Committee on Procedure that there should be either a taxation committee or at least taxation sub-committees of the Committee on Expenditure to look at matters such as these two Green Papers? My hon. Friend the Financial Secretary, when giving evidence before us this Sesson, said:
I see no difficulty, for example, in putting before the House or a Select Committee a Green Paper on the pros and cons and the difficulties and methods by which a value-added tax might be introduced.
I gather from that that he was thinking not of a sub-committee of the Expenditure Committee or of a taxation committee but of an ad hoc Select Committee to deal with this problem. All I ask is that we shall get an answer and some form of examination by Parliament. These two Green Papers will require very close consideration.
In dealing with the value-added tax, my right hon. Friend said yesterday that there would be no taxation on food.

Mr. Douglas: If the right hon. Gentleman reads the Chancellor's word correctly, he will see that that was not his undertaking. There will be some exemption for food. Will he, therefore, join with me in pressing for a distinct assurance from the Government that food will be exempt from such a tax?

Mr. Turton: I am grateful for that interruption because it has enabled me to find the quotation I was looking for. My right hon. Friend said:
We have made it clear that food will be relieved of the tax."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1394.]
He added that newspapers, periodicals and books would also be exempt. It


seems to me that there is a little difficulty over the Green Paper on the value-added tax. The other Green Paper on company taxation presents the same difficulty
I spent part of last Thursday in Brussels discussing the problems of the harmonisation of taxation within the European Community. The Commission told me that after the decision of 9th February there has to be a complete harmonisation in the structure of value-added tax and taxation of dividends. What is the purpose of this Green Paper if we are out of harmony at the end of it all with the European Economic Community? If the negotiations fail I can see that it will be all right and we can have our own value-added tax which I hope will not include food.
If the negotiations are successful we would be in a difficulty. I hope that we will be told what is the time-table for harmonisation. I will be corrected if I am wrong, but I gather that the idea is that harmonisation is to be begun in 1973, which is an interesting date, and is to be completed by 1978. I hope that we will be told what are the confines within which we are to have this examination of these Green Papers.
I welcome the Chancellor's announcement that he will publish a White Paper at the same time as the Finance Bill so that on Second Reading we can have that White Paper in addition to the Chancellor's exposition. This was a recommendation of the Select Committee, and we are very glad that it has been adopted. We made certain other recommendations and I would like to know, what Government thinking is on them. We asked that the time-tabling of the procedures on the Finance Bill should be such as to enable hon. Members to have adequate time between publication of the Bill and Second Reading to consult their constituents and professional bodies. In previous years the time has been inadequate. I would be grateful if the Financial Secretary could give us the Government's views.
We also recommended that it might be helpful if the Bill was published in parts, as was done in 1965, so that if a part was not ready hon. Members may still receive those parts which were complete. We also recommended that Standing Orders should be altered and there

should be an extension of the Resolution concerning incidental or consequential charges to enable hon. Members to put down Amendments in Committee on the Finance Bill which did not add to the charges on the revenue but made some pay less and some pay more. This would widen the scope of Amendments and it was recommended to us by the Clerk of the House. I would like very much to hear whether the Government will make that revision of the Resolution.
It is important that we bring our procedures up to date, because the time is long overdue. I cannot see why we should have all these taxing Bills at this time of the year. The Select Committee recommended that in future Revenue Bills should be brought in in the autumn. After all, if this big Bill dealing with the reconstruction of company taxation is to be brought in, why should it come in at daffodil time? There is no reason at all. It could not be classed as a money Bill under the Parliament Act. It would be much better to bring it in at our leisure in November and give it proper examination without the hurried restrictions of the Finance Bill time-table.
One real problem about our stagnant growth as a country, of which I am sure every hon. Member is ashamed, has to do with the fact that the money supply had that burst just about the time of the last election when it went up by 16 per cent. That really set the whole inflation going. In column 1374 of the Chancellor's Budget Statement yesterday—and I notice that the Yorkshire Post took up this point in an editorial—the Chancellor says:
Given the current growth of incomes, there would be dangers for liquidity and employment if we sought immediately to reduce the growth of money supply to much below 3 per cent. per quarter.
This seems to be a very dangerous philosophy because it means that if we have stagnant economy we can still have a 12 per cent. increase in money supply. My right hon. Friend went on to say:
But this does not mean that I intend the growth of money supply simply to accommodate the going rate of inflation.
Surely the real factor that we have to get at is that the growth of money supply ought to have some relationship not to the going rate of inflation but to the growth of the economy. Until we get that right we will not get the economy right.


The Chancellor went on to say, and this has worried me even more:
As the rise in costs and prices is moderated, so the aim will be to slow down the growth of the money supply."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1374.]
But if we can get over the hump of this inflation, and can get the economy growing, then I would want to see money supply expanded. That is the only way in which we could increase growth. This passage was, I thought, a fault in what was otherwise an extremely clear and excellent speech. It is important for the future of Parliament and the country that we have the growth I believe we can get under these far-sighted reforms of the Chancellor. But it does mean that we have to get the money supply under control. A great deal has been done to this end since we had that 16 per cent. rise in the quarter before the June Election—a rise of which I am sure all right hon. and hon. Members on the Opposition benches are thoroughly ashamed.

7.28 p.m.

Mr. William Hamilton: The right hon. Member for Thirsk and Malton (Mr. Turton) has made probably the most cogent and pungent criticism of the Budget to be heard from that side of the House, at any rate up till now. The part of the Chancellor's speech to which he refers, when he speaks of the money supply and the rate of inflation—in which he seemed to put the cart before the horse—seems to be a formula for continuing disaster. I agree with the right hon. Gentleman when he talks about the desirability of a Select Committee on Taxation or at any rate some subcommittee of the Public Expenditure Committee to deal with this point.
I wish that the right hon. Gentleman would come to listen to the evidence that we have been taking from the Treasury officials on the need to publish receipts. In addition to the expenditure side, we were told in evidence last week that the savings on expenditure were founded on very weak figures. Those were the exact words of the Treasury officials. But they presented figures on expenditure, although when we discussed the White Paper in the House a week or so ago the Financial Secretary advanced the same argument for not producing figures on the receipts side.
I wish to refer to one or two points made by the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) and the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). The more I hear right hon. and hon. Members opposite speaking, the more it impresses on me that we talk different languages. The hon. Member for the Cities of London and Westminster talked about the great desirability of making concessions on capital gains, particularly on small capital gains of up to £500. I have not been swamped with letters of gratitude from my constituency on that matter. I am waiting for them, but I suspect that my postbag will not be all that full with letters on that subject.
The right hon. Member for Kingston-upon-Thames talked about giving a lift to the people. I wonder which people he was talking about? Who have been given a lift, and who have been given a kick in the teeth by the Budget? He went on to say that the Government were doing the things which they promised at the General Election they would do. They are doing nothing of the kind. They said that they would reduce taxation, but they did not say whose taxation it would be. That is my main criticism of the taxation proposals in the Budget.
The Budget does not deal with prices, except to give them a lift. Nothing in the Budget will curb inflation. There is a lot in it which will increase the inflationary spiral, both short term and long term. There is nothing in it for the regions.
The Secretary of State for Trade and Industry gets worse with each speech. He delivers a C.B.I. lecture. We are not members of the C.B.I. We represent ordinary working-class people who often are struggling to make a living. When he and Ministers talk about excessive wage demands and the cost inflation spiral, about whom are they talking—the railwaymen, the postmen, the nurses? Are these the people who are jeopardising the economy? I am not aware of any condemnation by the Tory Party when the doctors asked for a 30 per cent. increase and have now got it or are about to get it. Right hon. and hon. Members opposite and we on this side of the House talk different languages because we represent different people.
I read The Times today. "Top people" read The Times. On the front page it says, "Budget news on other pages" and refers to
Family finances: Relief for salaried wives"—
there are not many of them in my constituency.
Big taxpayers are main beneficiaries … Top people's extra: What the £20,000 a year men will gain.
I looked at the inside pages and saw what they would gain.
The Secretary of State for Trade and Industry said that top people needed incentives and that high taxation was a disincentive. There is not a shred of firm evidence anywhere to prove that. Different authorities have investigated this problem and have signally failed to come up with any firm evidence—they may have had hunches—that that is so. But even if it were so, why should it be assumed that people at the lower end of the scale need incentives any less than people at the top?
I looked at the inside pages of The Times to see what it said about the relief for salaried wives. It said this:
The Chancellor's decision to treat husband and wife as separate individuals when it comes to paying tax will meet with great approval from a small but certainly vociferous group of well-paid working wives and even more so from those households where the wife enjoys a reasonable level of unearned income.
A minority of wealthy salaried wives will welcome that proposal. It is none the worse for that, except that there are millions of working wives in my constituency and in other constituencies who will wonder why this small vociferous section is singled out in this Budget, particularly by a Government which proclaimed that they would establish one nation.
The Times went on to say:
The penalty for getting married begins at £5,265
a year. So rich married wives—rich by working class standards, that is—who with their husbands earn over £5,000 a year will benefit by rather more than £2 a week—£115 a year.
Rich children will also benefit. The Times pointed out that the old attraction by which wealthy grandparents divested themselves of income by deed of covenant to grandchildren, would return.

So that there will be a bonanza for wealthy wives, wealthy grandparents and wealthy people generally.
The Times quoted individual figures. Lord Stokes, of British Leyland, will benefit from the Budget's proposals by £3,500 a year, or £70 a week. That is the tax concession he will get, not his salary. Mr. John Clark, head of Plessey—a generous contributor to Tory Party funds at the last election—will get a tax concession of £6,450, more than £100 a week. That is on top of his basic salary. Mr. John Davis, of the Rank Organisation, will get an additional concession of £3,850 a year. Sir Peter Allen, of I.C.I., will get an extra £5,200 a year—just £100 a week extra. Mr. Eric Drake, of British Petroleum, will get a measly £3,700 a year extra tax concession. Our people do not understand this—or they do! That is what this Budget is all about. It is a redistributive Budget. It is an obscene Budget. There is no doubt that at the other end of the scale the vast majority of working people will be worse off.
The Chancellor of the Exchequer referred to married couples with two children under the age of 11. He said that they would get a tax concession of £31 a year. That is assuming that the man is earning on average £28 a week. The vast majority of working people in Scotland are not earning anything like that.
Let me take a man in similar circumstances with two children under the age of 11 earning £25 a week—£1,300 a year. He will pay £40 less in tax—16s. a week. If his two youngsters are taking school meals, from tomorrow they will pay 3p per meal per child, which works out at 30p per week. So almost half his tax concession is going on increased meal charges alone.
There is no school milk, and no account is taken of that, or of increases in dental and ophthalmic charges, and in council house rents, or of the consequences of the Farm Price Review, which the Minister has admitted will take £98 million additionally off the housewives.
It is interesting to compare two papers which the Government have introduced, the one produced last October, "New Policies on Public Spending", Cmnd.


4515, and the Financial Statement which we got yesterday. In Table 16 of the Red Book we see that the surtax concessions in a full year are £38 million. In the former White Paper we see that the abolition of welfare milk costs £35 million. So the Government are taking from the kids milk to the value of exactly the amount of money which they are giving to the surtax payers. The rich kids whose income is to be assured by trusts are given £15 million concession according to this Red Book. The dental charges will cost £14 million. So the Government are making ordinary working folk pay for their dental treatment and giving that money to the rich kids.
The rich wives I have talked about have a concession worth £12 million, and there is a plus in the estate duty concession of £20 million, making a total of £32 million, which is exactly the sum which is to be got from increased prescription charges, which also start tomorrow. So the Government are making working folk pay for their medicine to give a tax concession to rich wives. On capital gains tax there is a concession of £18 million. I think it is £7 million which the ophthalmic charges will save, and on school milk £9 million is to be saved.
This is where the redistribution is taking place. The Government are taking milk from the kids and are putting up school meal charges and compelling people to pay more for their prescriptions—a hell of a lot more—and to pay ophthalmic charges and prescription charges, in order to give money to the wealthy. That is why I call it an obscene Budget, an unfair Budget. That is why the hon. Member for the Cities of London and Westminster was right when he said it was a Tory Budget.

7.43 p.m.

Mr. David Mudd: I am both delighted and relieved to have this opportunity to catch your eye, Mr. Deputy Speaker, after some nine months of oral gestation, belatedly to deliver my maiden speech. I hasten to tell the House that this reluctance to speak is in no way based on any reservations about the traditional tolerance of the House to maiden speakers or on any false modesty on my part. It is simply that

I promised myself that I would take my first opportunity to talk on this occasion and on this particular subject.
The constituency I have the honour to represent, Falmouth and Camborne, is unusual by West Country standards. First, although it has the traditional industries of agriculture and tourism, it embraces heavy engineering. In the southern half of the constituency we have Falmouth Docks and a world-famous tanker repair facility, well renowned for its standard of craftsmanship, and, above all, for a really significant record of industrial relations which it has had over the last few years. At the northern end of the constituency engineering is fully represented by the Holman Group of companies which overshadow and intermingle with one of Britain's oldest industries, tin mining.
The constituency itself was created in 1950, and since then it has had only three Members of Parliament. My predecessor, Dr. John Dunwoody, represented the constituency from 1966 until 1970, and certainly served his constituents well, as well as deservedly earning his spurs as a junior Minister in the previous Administration.
However, to many of us in Cornwall the greatest Parliamentarian the Duchy of Cornwall has ever produced was Dr. Dunwoody's predecessor, from 1950 to 1965, Harold Hayman. I say in all sincerity and humility that if ever there was a man who through his example of personal integrity brought home the real value of a back-bench Member of this House, then that man was Harold Hayman. I was delighted and proud to know him well, and I well recall meeting him in the last few months of his life, when he was a very sick man, but though he was a sick man he made a point of coming to London whenever necessary to defend the very small majority which the Labour Government enjoyed in 1964. Although he was sick, although he was weak, although he had given his health and given his soul and was giving his life for the good of Cornish people, not for one moment did he think of giving up or admitting defeat.
Harold Hayman told me something which I shall always remember, and I believe that if all hon. Members of this House would remember it as well we


would have better Members of Parliament. This is what he said:
Half a Member's work is looking after his constituents' interests and complaints. I can do this work from my home. While I am still Member, and while God gives me strength, so shall I continue to do whatever I can for the people who elected me and the thousands of other people whom I represent.
He then added:
I have seen the dire poverty of the depression pass, at least in Cornwall. It was easier to wipe it out than it will ever be to expunge its memory from the minds of those who were its witnesses.
The dire poverty of the depression may indeed have gone, but the grim totals of unemployment in West Cornwall show that there is still no real security for many of our would-be working families.
Yet, due to the callous disregard of successive Chancellors of the Exchequer of both parties, Cornwall's greatest natural industry has been given no encouragement to move into full production, full employment and full prosperity. I refer to the constant refusal of successsive Chancellors of the Exchequer to emulate the Governments of Australia, Canada, South Africa, Eire and the United States in the provision of a tax-free moratorium for the initial years of production of non-ferrous metalliferous mining. Ironically, the idea of a tax-free moratorium is one which would not cost the Treasury even one penny, either new or old, and yet the Treasury makes no move to give it, but without this very real incentive there will be little development, and there will be no mining in Cornwall, and without development there will be no profits, and without profits there will be no tax for the Treasury to scoop in. So what we in Cornwall say to the Treasury on this occasion is "Join us in nurturing this great natural wealth, help us to coax it to maturity, and then there will be rewards for all; but if you stifle us there will be a drain on the revenue"—and nothing for the vultures of the Treasury.
The case I make is no new one. On 21st June, 1961, in Committee on yet another annual Finance Bill, the right hon. Gentleman the Leader of the Opposition said that the need for a tax concession had been made all the more urgent because
We are facing a world shortage of tin".

He said it would not be a temporary shortage because
Consumption is rising very, very sharply all over the world while production, on the whole, is declining.
Later he said:
… there is a danger of an absolute shortage, of a real absence of the tin that we may need to ensure full employment and the maintenance of our export trade.
Replying, the then Chancellor of the Exchequer said this:
It is common sense that we should attempt to get all the mineral wealth we can from beneath the surface of our own country."—[OFFICIAL REPORT, 21st June, 1961; Vol. 642, c. 1515–7.]
What is even more serious than that the then Chancellor was unable to apply that common sense to create this incentive and that the Leader of the Opposition did not take the opportunity of one of his 13 Budgets to bring to fulfilment the very policy that in Opposition he had supported is the fact that the situation which was described so eloquently 10 years ago is, if anything, even more serious today.
The demand for world tin is increasing, yet bulk supplies are mined in those countries which have become masterpieces of economic and political instability. Although the output of tin from Cornwall is currently running at £2½ million worth every year, this is but 10 per cent. of Britain's national domestic need. This means that every year £20 million worth of sterling is being used against our own balance of trade interests to buy the very commodity that we could substantially produce—certainly to the extent of up to 30 per cent. of our own needs—by utilising our own resources.
If the potential is there, as I assure the House it is, why is it necessary to have a tax-free moratorium? The answer is simple. The risk element in nonferrous metalliferous mining is higher than in any other form of investment. It is not enough to tell an investor that he will recover the amount of his investment when the mine starts making a profit. To justify his gamble he must know in the early days that there will be no tax-taking when the mine reaches production and is finding its own peak. The economies of the United States, Canada, South Africa, Australia and the Irish Republic are certainly not being wrecked by the granting in those countries of a very wise and


intelligent tax-free moratorium. Indeed, the revenue in those countries is increasingly swelled year by year from the profits of mining ventures that would not otherwise have come to fruition in the first place.
It is estimated that £2,000 million worth of tin has been raised in Cornwall from the beginning of its history. Surveys show that it is still there in substantial quantities. Every ton of tin mined in Cornwall is not only a ton less to be bought from overseas but a ton more in terms of the men who work in the smelters at Kirby and at Capper Pass. It is, therefore, a vital contribution to Britain's future.
I therefore ask my right hon. Friend the Chancellor seriously to consider the question of a tax-free moratorium. I will try to make his task just a little easier by doing some of his basic homework for him. He need not worry about the fears of the Treasury about establishing a precedent in connection with mining. The Treasury has already short-sightedly done this by sweeping away investment grants and replacing them by investment allowances in a deluge of destructive policy which overlooks the fact that a mine cannot make profits from which to deduct its development costs without first raising the money and retrieving the money for that development. The Treasury may indeed have put a crock of gold on the larder shelf of mining but it has painted the ladder with slippery paint.
Second, my right hon. Friend need not argue that such legislation would be rendered impossible on grounds of definition, because, if his experts do not know the difference between deep-vein deposits of ore and metalliferous minerals and sand, gravel and clay, the Institute of Mining and Metallurgy, which is composed of experts and technicians and not of mineowners, would be happy to supply the details. My right hon. Friend need not query the availability of workers. We have the proof that we have the labour force. He need not query the shortage of tin and the world demand. The facts speak for themselves. All my right hon. Friend has to do—this I urge him to do—is to use one of those much-maligned but oft-quoted mere strokes of the pen to give our mineral producers exactly the same terms in this country as those which

are enjoyed by all the other metalliferous countries of the civilised and intelligent world.
If it is not the rôle of the Treasury to use its powers to encourage the development of important industries, if it is not the rôle of the Treasury to expand industry to help lower unemployment, if it is not the rôle of the Treasury to stimulate our balance of trade through home production of what would otherwise be costly imports, and if it is not the rôle of the Treasury to bolster the prosperity of the poorer corners of Britain, I apologise for the naïveté of my case. But if the Treasury accepts and answers even one of these responsibilities and challenges, Cornwall looks to its future with hope and to this Chancellor with undying gratitude.

7.56 p.m.

Mr. James Hamilton: It is my very great pleasure to follow the hon. Member for Falmouth and Cornwall (Mr. Mudd). If the hon. Gentleman was in any way nervous in making his maiden speech, he did not show it. I am sure that my colleagues will join me in saying that if the hon. Gentleman is as good as the previous incumbent of that seat his progress will be very great.
I liken the hon. Gentleman's performance to that of the Chancellor's yesterday; because we cannot deny that the Chancellor certainly gave a wonderful performance. It is there that I part company with him, because when he introduced his mini-budget in October we were all sadly disillusioned not only by his performance but also by the ingredients he gave us.
We are now beginning to bear the brunt of the decisions taken last October. Prescription charges have increased. The price of school meals has also increased. Shortly there will be the cessation of school milk to the over-7s in primary schools. Consequently, many of the workers, particularly in my country and in my constituency, will begin to realise that those of them who were silly enough to vote for this Government will have done themselves and the country a great disservice.
Those of us who come from development areas readily recognise that there is nothing for the development areas in


the Budget. The hon. Member for Falmouth and Camborne said that industrialists in his constituency have recognised that the change from investment grants to free depreciation is a retrograde step. Prominent members of the Scottish C.B.I. have told me that they made a determined effort to persuade the Chancellor, and particularly the Secretary of State for Trade and Industry, to depart from this exercise. It is now becoming well known that unless industrial areas receive investment grants many workers in those areas will be declared redundant. It must be remembered that there are in Scotland at present some 122,000 unemployed. I would hazard a guess that there is a distinct possibility that the record post-war unemployment situation in Scotland in 1963, which was inflicted on Scotland by a Conservative Government, could now easily be surpassed. Unless the Government are prepared to do something about the situation Scotland is doomed to failure.
The House will know that my hon. Friend the Member for Motherwell (Mr. Lawson) yesterday made a certain statement and today thought fit to retract it. The simple explanation is that although the members of the Scottish Economic Development Council listened to the Prime Minister at the meeting described by my hon. Friend they were certainly disgruntled when they left the meeting. They realised that because the people of Scotland were not prepared to align themselves with the Conservative party they would suffer. Certainly nothing in this Budget will do anything to relieve the situation in Scotland.
In my own county of Lanarkshire, in addition to the increases I have already mentioned, we are faced with the quinquennial review arising from the 1956 Valuation and Rating (Scotland) Act. That review shows that the valuation has increased by 110 per cent., which will mean a terrific upsurge in rates. This will also bear heavily on the lower paid workers. When one considers the large amount of money that is being given to people in the higher income group, it is understandable that 25 per cent. of the population in Scotland, earning £19.50 and less in their gross wage packet, will receive nothing from the Budget. Indeed those with children of eleven years old or under attending primary school will be

required to pay for school milk, and so on, and there will also be additional bus fares to cope with. Since many of these people are already working a 40 hour week they have no possible chance to enhance their earninges in any way.
I am glad to see that the selective employment tax is to be cut by 50 per cent., but it is a matter of conjecture whether this will benefit my area. Last night, following the Budget Statement, we were told on the television news that some of the supermarkets had already reduced prices. How could they possibly do that when S.E.T. is not to be reduced until July? This gives the impression that because they now have in power the Government of their choice, they are prepared to do something tangible to show appreciation for what the Government are doing for them.

Mr. Peter Hordern: Does the hon. Gentleman realise that the first group to make that declaration was Sainsbury's, and does he appreciate the political character of Lord Sainsbury?

Mr. Hamilton: I appreciate the position of Lord Sainsbury, but I do not retract what I have said. If Lord Sainsbury is able to reduce his prices after the Budget, surely he could have reduced prices on Monday. This is the point I am making. If prices are able to be reduced before the S.E.T. is cut by 50 per cent., then surely the whole situation should be examined. Personally, I am not sure that S.E.T. reduction will lead to any reduction in prices. The Reddaway Report, which was a very good report, proved conclusively that the distributive trades which have been paying S.E.T. have been able to bring about greater efficiency and that the tax has proved to be workable and in the country's best interests.
I should like to mention the situation of the old-age pensioner as a result of this Budget. Certainly the increase granted by the Chancellor is the highest in the history of the country, but I cannot accept the fact that the increases will not come into operation until September. And I would level the same criticism at a Labour Chancellor were the Labour Party now in office. It is morally wrong for politicians to use the old-age pensioners as a pawn in a great political game. Our old people have been the


producers of our wealth and have given us their sons and daughters to fight in a world war. The first Government to take old-age pensions out of the political arena will be doing a great service to our retired citizens. The old-age pensioners will find it difficult to accept that the single pensioner is not to receive the full supplement, which will amount to £1·60 for a married couple. Since coming to this House I have persistently advanced the argument that the supplementary pension benefit and retirement pension should be increased together. Each time the old-age pension is increased and at a later stage there is an increase in the supplementary benefits old people misunderstand what is happening and find the situation difficult to accept.
A great deal has been said already in this debate about the situation of workers, and one hon. Member yesterday brought into this debate the Industrial Relations Bill. Although he should not have brought in that legislation on this subject, I wish to take up his challenge. I would point out that in my constituency there was a record production in the British Steel Corporation Clydeside works even though they were operating with obsolete equipment. For the good of Scotland it is essential that the Government should have talks with the British Steel Corporation to ensure that the steel complex comes to Scotland. If it does not the heavy unemployment that is being experienced in Scotland at present will increase still further. It will mean the demise of the steel industry in Scotland and will put the ancillary industries which have come to Scotland in a worse situation.
I conclude by saying that in the main this Budget will not give joy to the people I represent. It is certainly a Budget which will give immeasurable joy to the City of London, and will also please Conservative Members of Parliament. However, on behalf of my constituents I want in the strongest possible terms to condemn the Budget since it falls so short of what is needed.

8.9 p.m.

Mr. William Clark: I wish to join the hon. Member for Bothwell (Mr. James Hamilton) in offering congratulations to my hon. Friend the

Member for Falmouth and Camborne (Mr. Mudd), whose constituents need have no doubt that they have a worthy representative to put forward their constituency claims.
In the past few years politicians have fallen into a certain amount of disrepute, mainly due to broken promises. Consequently, I welcome the Budget. In our manifesto we said that we would start on S.E.T. and give reductions in taxation. There is nothing wrong in promising the electorate something and then, on getting into power, actually carrying out that promise.
The underlying philosophy of this Budget is the incentive to earn money. Nobody will deny that we took over—and are still in—a difficult economic period. We have rather overlooked and played down the fact that since last June we have reduced our overseas debt. Hon. Gentlemen opposite may claim some credit for this in that there is a balance of payments surplus. But we must not forget that that surplus was from invisibles. So there is no point in hon. Gentlemen opposite criticising in a derogatory, derisive and sneering way the work of the City of London. That is where our invisibles come from. If it were not for those invisibles—the hon. and learned Member for Lincoln (Mr. Taverne) knows this better than most in this House—the balance of payments surplus last year would have been precisely £3 million.
We must remember that our economic position today is not all that strong, and we should not underplay or exaggerate our difficulties. However, we suffer from inflation, from the wage cost explosion, from unemployment, from low profitability and from low investment. This is the position which faced the Chancellor. The Budget has gone some way to remedy that position. Let no hon. Member delude himself into thinking that one Budget or one Act of Parliament will immedately bring prosperity to everybody. However, I suggest that this is a step in the right direction.
It does no good to the country to speak about two nations. This Budget has a wide spread. It gives a 20 per cent. increase in the old-age pension—one of the largest increases we have had—and there is the small incomes exemption, the


dependent relatives' allowance, the child allowance, and so on. Any married man with children will now benefit under this Government.

Mr. William Hamilton: He will not.

Mr. Clark: It is no use the hon. Member for Fife, West (Mr. William Hamilton) saying, "He will not". There is a reduction in taxation in a full year for child allowance of £207 million. Any reduction in taxation, although we may say that it is not enough, is a step in the right direction. We must take that into account for those on low incomes. We must not look at the Budget in isolation. There is the family income supplement, and this again helps low incomes.
Much play has been made about the surtax payer. The top rate now will be 75 per cent. on earned income—15s. in every pound. Hon. Gentlemen opposite talk about the advantages and benefits which the surtax payer is getting. It would be better if they asked about the take-home pay of all these chairmen referred to by the hon. Member for Fife, West. The take-home pay of a man earning £20,000 a year before the Budget was £7,600. He pays £12,400 in tax. We should not over-exaggerate that those in the higher income brackets are getting the most benefit. As my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd Carpenter) said, when we reduce taxation we can give the most benefit only to those who pay most tax. We cannot give benefit to people who do not pay or pay very little tax.
Another feature which will have a great advantage for the country is the increase in pensions for the self-employed. In this way we are increasing the savings of the country. This is something which we sadly lack.
In view of the time wasted on capital gains tax, particularly of the financial brains of the country, I welcome the modest step which the Chancellor has taken in proposing that a profit should be ignored if on disposals it does not exceed £500. But what if, after computation, the profit of a capital gain, with a disposal of say £700 or £800, is under £50? I do not think there will be many examples of this kind, but it would be illogical to take away the £50 exemption for administrative reasons and not allow it to the person who sells over £500 of shares.
We are on very solid ground towards growth with savings. The doubling of the upper limit of Save As You Earn will be or great benefit. I regret that our savings and the various bonuses which we get are all related to National Savings—that is, gilt-edged. I do not denigrate the work gilt-edged has done or what the National Savings Movement has done, but I think that we have got to the point where if we give a tax incentive to a man to save, it should also be allowed on equity savings. I think that both sides will realise the importance of this. I do not now seek to make a party point. In 1946 Treasury 2½ per cents.—known as Daltons—were issued for £100. Today are worth £27, so in real terms they are now worth £10. This activates against savers going into National Savings and into the gilt-edged market. If one saves £1 in National Savings one gets bonuses and interest, but at the end of the day there will be no capital growth on that £1. I make a plea that contractual savings should be linked with equity holdings whether they be unit trust, investment trust, or whatever.
I make no bones about saying how gladly I welcome the abolition of S.E.T. We said at the General Election that we would abolish it, and it has been halved to £250 million. It is the partial half-promise redeemed. One advantage is that prices will come down. Evidence came out even last night. When it becomes effective in July we shall get far more reductions in prices. The S.E.T. procedure means that there are forced loans from industry to the Government. Sometimes one pays out S.E.T. and eventually gets it back. At any one moment the Government of the day are holding £200 million of companies' money. Halving the rate means that £100 million extra will go back into the liquidity of companies. This must help investment. The reduction in corporation tax by another 2½ per cent. will also improve the liquidity of companies.
The Green Paper on V.A.T. is very interesting. I should like to reiterate what was said by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). We must discuss this with the professional bodies, trade and industry, and the rest. But I think that a Committee of this House sitting upstairs would be an admirable way of dealing with the Green Paper.
I should like to answer the charges made yesterday by the Leader of the Opposition and repeated this afternoon by hon. Gentlemen opposite that, with the introduction of a value-added tax, the cost of living will go up. This is completely untrue. Purchase tax produces £1,500 million and S.E.T. about £500 million, making a total of £2,000 million a year. In his Budget the Chancellor has reduced that £2,000 million by £250 million by halving S.E.T. Not until we come to discuss V.A.T. and fix the rates will it be seen whether or not it increases the cost of living.
The Chancellor said that he had considered an employment tax, commonly known as a payroll tax. I accept his reasons for rejecting that. I would leave in his mind this thought about the payment of national insurance contributions. In this age of computerisation it should not be necessary to waste time licking stamps. It should be possible to collect National Insurance contributions in a much more effective and efficient way. We all welcome the promise of a White Paper to deal with the streamlining of personal tax so as to do away with fluctuations in allowances and to provide for a graduated rate of tax depending on a person's income.
I cannot understand the carping criticism of some hon. Gentlemen opposite. I am not making a party point, but the Labour Government in their six years of office increased taxation by £3,100 million a year. We have reduced taxation. My right hon. Friend is reducing taxation by £680 million in a full year. This is nothing to carp at. Hon. Gentlemen should welcome this.
We should not look at the Budget in isolation. The idea underlying it is to give an incentive for increased growth by a reduction in and an adjustment of taxation. By itself the Budget will not do this, but taken with the Industrial Relations Bill and the family incomes supplement it will give an incentive and increase our growth.
This is an historic Budget. We have been told time and again that the reform of taxation is wonderful in itself but administratively far too difficult. Here, at last, we have a Chancellor who has said that he will not be governed by administrative difficulties but will reform and

simplify taxation. For all these reasons I welcome the Budget. It redeems some of our pledges, it reduces taxation and it will lead to further growth. I admire the courage of my right hon. Friend and his team for getting the administrative difficulties out of the way so that we can simplify and reform taxation.

8.24 p.m.

Mr. Charles Morrison: This is a depressing day for hon. Gentlemen opposite. For six years, in Budget after Budget they have been able to revel in the Socialist joys of increasing taxation. They cheered on their Chancellors as they heaped new burdens on the shoulders of the taxpayer, taking an ever-increasing proportion of the national product in taxation. This Budget is different, and it has been enormously well received by the whole country.
During six years of Labour Government we learned once more that Socialism goes hand in hand with high taxation. After this first Conservative Budget for six years, we are reminded that Conservative Government goes hand in hand with cuts in taxation. I remind the House that between 1951 and 1964 Conservative Governments cut taxation by £2,000 million. Between 1964 and 1970 the Labour Government increased taxation by £3,100 million, and already under Conservative Government it has been cut by £951 million.
In the Conservative election manifesto proposals to cut taxation it was said:
We have done it before. We can do it again.
Now we are doing it, and I congratulate my right hon. Friend on his Budget. He has struck a nice balance between social and economic measures and between his concern for the short term and his strategy for the years ahead.
Economically, the Chancellor's judgment will prove to be correct. It is understandable that we are all worried about the current high rate of unemployment. If the measures in the Budget do not bring about the improvement for which my right hon. Friend hopes, I am sure he will take further action. My right hon. Friend's judgment is correct, not just in the light of the theoretical economic effects of the Budget but because the whole Budget package will


give people a new confidence in the future, that is the most important thing of all.
I suspect that the two announcements in the Budget which will have given greatest pleasure are that old-age pensions will be increased and that S.E.T. will first be cut and then abolished. It will have given great pleasure to old-age pensioners that the increase is to be effective from 20th September, which is a month sooner than previous increases have become effective.
Few people outside the House, and fewer inside it, have said anything in favour of S.E.T. I have no doubt that the cut will at worst contain price increases and in many instances cut prices.
No one has escaped the nonsense of selective employment tax. It was meant to impinge only on the service industries, but many of them service manufacturing industries, so S.E.T. indirectly added to manufacturing costs. For example, agriculture was a manufacturing industry, but services like machinery repairs were subject to S.E.T. Furthermore, the forced temporary loan by agriculture was an added burden, harming the industry's liquidity and adding to its borrowings. The abolition of this tax will be a boon to farming and an extra boost following the excellent Price Review introduced by the Minister of Agriculture.
Few industries were in greater need of encouragement. It is remarkable that, in 1969–70, the purchasing power of aggregate net farming income was only 91 per cent., in constant money terms, of that in 1964–65, and there was only a marginal improvement, to 92 per cent., in 1970–71. Therefore, better financial prospects for agriculture were and are essential if it is to expand as required. The Price Review, coupled with the S.E.T. and capital gains tax proposals in the Budget, will help to introduce and retain confidence and capital in the industry.
The proposal to abolish the charge to capital gains tax on death is very welcome to many farmers. It has been the objective of successive Governments to encourage the creation of more economic farm units, but capital gains tax on top of estate duty ran completely counter to this intention. Even with the estate duty abatement on land, it is difficult enough

for a successor to continue working an owner-occupied farm intact. And with capital gains tax as well, it is virtually impossible.
For example, for a farm of 350 acres, bought in 1951, estate duty would have been about 24 per cent. by 1965, before capital gains tax was introduced. But by 1968, with increased market values and with capital gains tax, the total tax would have added up to 27 per cent. The incidence of estate duty and capital gains tax would have steadily grown. By 1978, even assuming a rate of inflation of only 3 per cent., estate duty on that farm would have been at 34 per cent., and by 1988, it would have been 40 per cent.
The result of the incidence of both capital gains tax and estate duty would have been an increase in the number of sales of farms, a lack of continuity in farming and a fragmentation of the structure of agriculture which is the complete opposite of what is desired. Therefore, the abolition of capital gains tax on death will be a much-needed relief.
I hope that, in a future Budget, the Chancellor will be able to help smaller owner-occupiers in particular over estate duty. Because of inflation and increased land values, the burden of estate duty is hitting small farms with great harshness. In real terms, this burden on a farm of 100 acres—in modern terms, quite a small one—increased seven-fold between 1949 and 1970. It is worth comparing that increase with the increase on a farm of about 1,000 acres, where the incidence of estate duty would be only about two-and-a-half-fold So it is the small man who suffers.
Faced with such an excellent Budget, it may seem a little ungracious to point out any omission, but I was a little sorry to note that there was no reference to betting tax. I believe that there is a strong case for widening the differential between the rate of general betting duty for off- course and on-course betting. This would provide two advantages. First, for the Chancellor there would be an opportunity to increase total revenue and, secondly, encouragement would be given to horse and dog racing.
Just before Christmas the Financial Times estimated the off-course betting turnover for 1970–71 at £826 million. It also estimated that 93 per cent. of all


betting on horse racing was now off-course. That is not wholly surprising because off-course betting is cheaper for the punter, who does not have to pay admission charges to race courses or bear travelling expenses to meetings. The money he saves can provide him with more to indulge his love of gambling.
This incentive to off-course betting is partially responsible for the fall in attendances at both greyhound and horse-race meetings. Greyhound racing attendances have decreased by 40 per cent. since 1961. Horse-racing attendances have gone down by about 17 per cent. in the last four years.
A rough calculation shows that a 2½ per cent. reduction in the on-course betting duty could be balanced by a 1 per cent. increase in the off-course duty. There is no reason why the on-course betting duty should not be reduced by 2$ per cent. while the off-course duty is increased by more than 1 per cent. If this were done the Chancellor would obtain an increase in revenue and racing would benefit considerably.
For the professional punter the relative attractions of off-course compared with on-course betting would be reduced and there would, therefore, be a tendency for more people to go racing actually on the racecourse. This would strengthen the on-course market, increase revenue for race courses and, incidentally, provide much appreciated help for the Tote.
Horse racing is an industry as well as a sport. It employs a large number of people and provides entertainment both on course and by radio and television to millions of people throughout the country. Sales of bloodstock abroad help our export figures. But the shortage of money in racing, and in particular the relatively low prize money offered in the United Kingdom, have put this sport and industry in a parlous state.
For example, prize money in only two States in Australia, New South Wales and Victoria, exceeds the total for the whole of the United Kingdom. Unless this situation is changed at home more and more of our best horses will go abroad and, in due course, potential export sales will be seriously affected and racing will

become less interesting to the British people.
The only sector of the racing world which is doing really well is that comprised of bookmakers. Their pre-tax profits have steadily grown and between 1968 and 1970 four of the major bookmaking concerns increased their profits by 41·8 per cent. in one case, 185 per cent. in another, 157·9 per cent. in another and by no less than 394 per cent. in yet another. It is hard to believe that, given these profit margins, bookmakers could not stand a considerable increase in the off-course betting duty, to the advantage of both the Chancellor and racing. Therefore, I hope that it might be possible for my right hon. Friend to give further consideration to the betting tax, with a possible view to making some recommendations and proposals within the Finance Bill.
We had yesterday a historic Budget, and I have no doubt that its appreciation today will continue amongst a very large majority of the population until the next year's Budget, when I hope that we shall be able to look forward to still more improvements. Meanwhile, I congratulate my right hon. Friend once more on an excellent Budget.

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Mr. Dick Douglas.

Mr. William Hamilton: On a point of order, Mr. Deputy Speaker. I have no wish to criticise your selection of speakers, but it has not escaped the notice of Members on this side that you have called two successive Members from the Government side, although during the course of the debate back bench Members opposite have taken 79 minutes, apart from the speech that we have just heard, as compared with 58 minutes from the Labour back benches.

Mr. Deputy Speaker: I am grateful to the hon. Gentleman for letting me know that he would seek to raise a point of order, which has given me time to look up the relevant part of Erskine May upon the matter. It is quite clear that it is the undoubted right of the Chair to call whoever the Chair thinks right to be called, bearing in mind what the Chair thinks to be best in the general


interests of the House in the debate at any one time. The actual sentence in Erskine May bearing upon the matter is:
It is the Speaker's duty to watch Members as they rise to speak; and the decision should be left with him.
It must be like that, and it so happens occasionally, and in my experience, too, that the Chair has decided that it is better in the interests of the debate to call two Members in succession from the same side. But it should not be taken in any way—and I am sure that the hon. Gentleman does not take it so—to affect the impartiality.

Mr. Hamilton: I take it, Mr. Deputy Speaker, that we can now expect two successive speakers from this side of the House.

Mr. Deputy Speaker: Not necessarily. But it could well happen. Mr. Douglas.

8.42 p.m.

Mr. Dick Douglas: I would hasten to follow the hon. Member for Devizes (Mr. Charles Morrison) in his excursion into the field of horse racing, but my haste is halted in that I am not a betting man. Nevertheless, I shall comment along those lines by saying that the Budget is a gambler's Budget. The Budget is really gambling with the future of the British nation, and gambling in a way that merits a great deal of attention by the people of this country as a whole. The euphoria with which the Press welcomed it this morning will disappear in a few months' time. I hope to enlarge upon my reasons for that view in the brief time that is available to me.
I shall touch on one or two points made in the hon. Gentleman's speech. I recognise that he spoke especially from his background of farming interests. I recognise also that the British consumer will have to pay to subvent the British farmer. There are good reasons for supporting British agriculture. But there are a number of reasons why we should not go along the lines upon which the Government have embarked very hastily since they took office. There is a direct transfer away from tax-supported subvention to market supported subvention, and this, on general lines, is the Government's philosophy.
We see that the two arms of this policy relate to moving away from the tax-supported subventions in agriculture and moving towards a form of indirect taxation, albeit the value-added tax, which will bear very heavily on consumers, and although many of us may be very favourably disposed towards looking at the long-term values of entering the European Economic Community, we should not pre-empt our position there by accepting the European value-added tax before we see the terms and conditions of entering the E.E.C.
I want to draw the House's attention to the duplicity of the Government on this particular issue. The nation deserves an answer, because it must be clarified very quickly.
Yesterday, the hon. Member for Banbury (Mr. Marten) asked:
In the meantime, if we are to have a value-added tax, would the Government assure us that it will not be placed on food?
Replying, the Chief Secretary said:
This assurance has already been given both by myself and by others in the House."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1338.]
and he referred to a Written Answer on 15th December. However, looking at that Answer, it is not really an assurance.
I go on to examine the words of the Chancellor of the Exchequer. In his speech yesterday, he said:
We have made it clear that food will be relieved of the tax, except perhaps those few items already subject to purchase tax".—[OFFICIAL REPORT, 30th March, 1971; Vol. 814. c. 1394.]
Then I go a stage further and look at the Green Paper. This is the crux of the Government's duplicity. Paragraph 4.3, headed "Food, farmers and fishermen", says:
In E.E.C. countries with a V.A.T. in operation, food is taxed, though at a reduced rate for at least basic agricultural products. If our application to join the Community is successful, we shall, of course, within such period of transition as may be negotiated, have to come into line with other Members in so far as taxation is harmonised.
Mr. Charles Morrison: It is only fair to read the next sentence:
In the meantime we are free to consider also other ways of giving relief to food and food products.
That obviously refers to what may happen when we are in the Common Market and not to present circumstances.

Mr. Douglas: With respect, it refers to the transitional period and not to the period when we accept the full implications of the Treaty of Rome.
I now turn to the general Budget strategy. I have said already that this is a gambler's Budget. The Government are gambling with the surplus which has been hard-won by the people over the past few years. They have had a golden opportunity to give us export-led growth. Do they consider that the taxation alterations in the Budget will give us export-led growth? There is no indication in the Budget analysis or the right hon. Gentleman's speech that a resurgence in exports is expected. The Government do not expect Britain to gain a larger share of an expanding world market in terms of its international trade. There is no expectation of that in the Budget speech or the economic forecast.
Today, the Secretary of State for Trade and Industry gave workers faint praise for producing record exports. On one of the few occasions in our history we have had a positive balance of visible trade. In the past, we have had to pay our way on the surplus of "invisibles". If workers and managements need any incentive to produce more, one has to question whether the Budget supplies it. This massive export total was acheved at a time of Government intervention. Do the Government expect this rising trend in exports to continue when they are manifestly withdrawing from the economy and manifestly dismantling all the instruments of Government persuasion and Government assistance to the economy? These questions must be answered, because the Government are gambling with the future of the people.
It is all very well to please one's friends when one gets into office and to give handouts, but we are thinking of the 55 million people of the country and not just of the surtax payers, not just those with incomes of £20,000 or £30,000 a year. A Written Answer to my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) yesterday showed that perhaps 200,000 houses in Scotland failed to reach the statutory tolerable standard, and there was more of the same in a series of Written Answers. Are the people in those houses being given an incentive by this Budget?
Quite rightly, the Secretary of State for Trade and Industry spoke of the falling off of investment in the economy. Let us examine the forecasts even after the Budget changes. The increase in private fixed investment from the first half of 1971 to the first half of 1972 is ½per cent. The Government's strategy in the regions—and I hope that I am not misinterpreting—is that if they can get a rising rate of economic growth in the nation as a whole, the fingers of growth will be pushed into the regions. Will that be done with an increase in investment of ·5 per cent.? A massive increase in investment is needed for that.
The regions need to be given confidence, but the entrepreneurs of Scotland and the North of England will not be given confidence by the miserable increase in investment forecast in the Budget. Yet the Government rely on the market mechanism to increase investment opportunities. That is another reason for saying that this is a gamblers' Budget. The increases in stock market quotations today were a clear indication that that is how the stock market regards the Budget, but stock market prices are not necessarily expressed in purposeful investment.
When the Government make concessions to the higher income groups, they assume that those concessions will not result in increased consumers' expenditure, but will be expressed in savings and eventually in investment through the market mechanism. I greatly doubt it. Their own figures clearly show that they are looking for an increase in consumer expenditure of about 5 per cent. An increase of that magnitude and with our consumption pattern inevitably having a propensity to imports, this will inevitably thrown out the trade balance, so that we shall be back again on the slippery slope of an adverse trade balance and an adverse balance of payments. The surplus was hard earned by the people of this country. It was earned not by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) or any of us on this side of the House but the millions of workers whom Conservative Members malign for asking for what they call inflationary wage increases.
I accept that there must be a partnership between management and labour to


ensure that we pay our way in the world, but that partnership is severely undermined if the Government think that after the tax concessions given to those in the higher income groups there will not be a feeling among people on the shop floor that if there are any hand-outs they should have a portion of them, not as hand-outs but as a right. We are in danger of undermining the whole psychological approach that we should be adopting. We should be having not a higher disposable income but a higher degree of interest.

Mr. Hugh Dykes: Since all these questions are a matter of relative degree, does the hon. Gentleman agree that there is a reasonable case for saying that there is sufficient by way of a redistributive element in that the tax band will cover the range from 30 to 75 per cent., and that there is sufficient redistribution in the top rate for higher-earners, with all the other arguments that flow from that?

Mr. Douglas: If we were looking only at the revenue side, that might be so, but we are looking not only at the way in which the Government produce their revenue but at the total budgetary picture, the nature of public expenditure as a whole. That point has been completely missed by Conservative Members. They adopt the mental attitude that the social wage does not matter. But it does matter to people. Good housing is more of an incentive to work hard and purposefully than a tax incentive. There was a television programme the other night on the new town of Livingston. It has had its possibilities undermined by the action of the Government and other actions. The people who went there did so in the main because of the new housing opportunities. That new housing was provided 100 per cent. by public expenditure. That is the sort of thing that the right hon. and hon. Members dismiss.
What happens if the Government's forecasts are out? They are looking for an expansion in consumer expenditure of about 5 per cent. To be 1 per cent. out with that means about £200 million, a very large figure, and if they are wrong in that they have taken down all the bulwarks for ensuring a redistribution of industry in terms of population and employment opportunities.
We have in Scotland 122,500 unemployed. The Budget does not indicate any falling off in that figure come next winter. It is a stable figure, acceptable in the Government's view of the economy over the next year to 18 months. But it is unacceptable to us on this side of the House. The Government have removed the opportunities given by investment grants, intervention by the I.R.C. and the Industrial Expansion Act, all of which are being reduced or eliminated by the Government. They do not like intervention by the Government in terms of regional policy. What prospects do they offer to the people of Scotland and the other regions for a reduction in unemployment?
The Chancellor has indicated a stabilisation of the position. There is to be no taking up of the slack. The slack is still going to be there in the economy and the miserable rate of 3 per cent. in economic growth is all the Government aim at at present. That is not big enough for the Scottish economy or the people of this country. I suspect that, when the local authority elections come in Scotland in May, the Conservative Party will get a drubbing. I suspect also that, when hon. Members opposite come to explain the working out of the Government's Budget strategy a year or so hence, they will be in severe difficulties. I excuse them for gambling with their own future. What is inexcusable is their gambling with and wasting the resources of the people.

9.1 p.m.

Mr. John Biffen: There is something of a surrealistic nightmare at this stage of the debate in realising that 80 per cent. of back benchers present opposite have been transplanted from the Scottish Grand Committee.
It is rather sad that the hon. Member for Fife, West (Mr. William Hamilton) is absent, because it is to his speech that I would like to address a few introductory comments. He has swallowed the slogan, so temptingly put about by my hon. Friend the Member for the Cities of London and Westminster (Mr. Tugendhat), that this is a Tory Budget. I wonder. It could just be that this is the Jenkins Budget that never was. We have on record very good evidence to suggest that the right hon. Member for Birmingham, Stechford (Mr. Roy


Jenkins) was fully aware of the compelling arguments for some alteration in the incidence of direct taxation upon high income earners. Granted that point, and granted the disposition of the right hon. Gentleman, egged on by the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) and the hon. and learned Member for Lincoln (Mr. Taverne)—"Euro-Brits" to a man—who doubts that they would have been attracted by the prospect of a value-added tax?
Indeed, the proposition of a merging of the direct tax rates—of surtax and income tax—would, I am certain, have appealed particularly to the right hon. Member for Cheetham. I am sorry that the right hon. Gentleman is not here and, therefore, is unable to attend to all my inferences. But my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who had the business of conducting a debate on television with the right hon. Gentleman yesterday afternoon, will agree, I am sure, that I am not misrepresenting the attitude of the right hon. Gentleman.
Later in my speech, I shall return to the possibility that this Budget does not quite bear the true, authentic, unchallengeable stamp of Toryism. I am not saying that it is not a good Budget. I am happy, and I will say many kind things about it. I will reserve the more detached parts of my speech for the peroration.
Just before I finish with the relics of the Scottish Grand Committee, I want to touch on the most charming characteristic of the hon. Member for Fife, West, who has to overcome the major disadvantage that he is not a Scotsman. He has to appear that much more aggressive when he comes to debate these things. He was talking about the Budget obscenity and "giving away There is something wonderfully Orwellian about the concept that when we take from a citizen slightly less than we were taking hitherto, somehow or other it involves giving away. I hope that, for the productive conduct of our discussions on this Budget and everything that will flow from it, we shall avoid these Orwellian slopes which I realise are obliged upon the hon. Member for Fife, West.
I so much enjoyed the Budget of my right hon. Friend because it falsified a

fear I had that this year, because of the discussions at Brussels, there would be whole areas which would be "no go" areas in economic policy—whole areas of taxation from which my right hon. Friend would feel obliged to desist because he would be open to the accusation that he was already indicating to our prospective European partners that we were prepared to accept terms and, by virtue of the Budget generally, that we had already taken on the mental attitude of having become members of the Community. He resisted that temptation, and it is valuable that he should have done so.
I will deal first with the direct tax, then the indirect taxation changes, proposed or in prospect and then the relevance of the Budget to current economic circumstances and the problem of inflation. On the direct tax changes I would like to give a vigorous nod of welcome to the proposed merging of income tax and surtax into a common form of direct taxation. This is a reformer's achievement, the achievement of a radical reformer in the best traditions of Toryism.
From now on I will proceed, I imagine, under the slightly disapproving eye of my right hon. Friend the Member for Kingston-upon-Thames. This afternoon we have had substantial increases in the National Insurance contributions on the graduated principle. Are we not, as was suggested by the right hon. Member for Coventry, East (Mr. Crossman), moving towards a social security tax financed out of a pattern of taxation, a pattern of impost, not all that different from income tax? If that is so, let us not exclude from our considerations one final merger, namely, income tax with National Insurance contributions.

Sir Brandon Rhys Williams: Hear hear.

Mr. Dalyell: Hear hear.

Mr. Biffen: I know that the voices will gather as I proceed. I echo the comments of my hon. Friend the Member for Cities of London and Westminster and hope that in the final pattern of direct taxation the surcharge to be levied on investment income will not be of such modest dimensions and operated in such a fashion that it will bring gimmickry rather than equity to the rewards of savers.
Turning to the indirect tax proposals, I am delighted that 50 per cent. of S.E.T. disappears. I can think of no single tax proposal announced yesterday which has commanded greater enthusiasm from these benches. What encouraged me is that it has gone without having to bring in another form of indirect taxation. Therefore, I ask myself. "If only 50 per cent. of S.E.T. remains, do we need a value-added tax in order to demolish this relic?"

Mr. J. Bruce-Gardyne: Naughty.

Mr. Biffen: No—an innocent observation. I begin to think about the pledges on reducing public expenditure and, indeed, the opportunities which reductions in public expenditure would provide for the removal of the remaining 50 per cent. I shall not deploy, only out of interest of time and not out of lack of conviction, the argument about the areas in which I should like to see further reductions in public expenditure. It would touch on higher education, overseas aid and financing of the investment programme in the public sector. I shall be happy to do that whenever the occasion is provided; I will not run away from it. However, any thoughts which I have about the Government perhaps shrinking from the challenges of cuts in public expenditure were wholly unfair because the Government have already given an earnest of their determination to make cuts in public expenditure, and I believe not necessarily that well begun is half done but in the integrity and determination of the Government in this area.
But in the one significant decision which has resulted in cuts in public expenditure—namely, the decision to move away from investment grants, not to investment allowances, but to tax allowances—the savings to the Exchequer accelerate through time so that the most dramatic of the savings become apparent not next year or the year after but in the period beyond that. Therefore, I can see emerging scope for embracing the disappearance of the other 50 per cent. of selective employment tax without any thought of compensating taxes.
I must put on record that I have the gravest doubts about a value-added tax. I do not wish to dwell too much on the interchange which I sought to have with

the hon. Member for Clackmannan and East Stirlingshire (Mr. Douglas). When he has been a Member longer he will realise that I am quite an ally. I was seeking to support him. This is not an unknown situation from time to time.
But my hon. Friend the Member for Devizes (Mr. Charles Morrison) is innocent if he imagines that a value-added tax, in the Common Market context, which is specifically assigned in part to finance the common agricultural policy, can in one country be subject to unilateral considerations to offset the impact it would have in that country on foodstuffs. Once the value-added tax is assigned specifically to help finance the common agricultural policy, the consequences for the taxation of foods at the breakfast table in all member countries of the Common Market will be uniform and cannot reasonably be thought to be subject to exceptions. But time may tell. I travel with scepticism; my hon. Friend, as ever, with hope.

Mr. Bruce-Gardyne: My hon. Friend is being a little unreasonable about the value-added tax, because the proposition in the European Economic Community is that not more than 1 per cent. of the tax should pass to the Community budget. My hon. Friend cannot refer to all proceeds passing to the Community budget.

Mr. Biffen: Certainly. I am sorry if I gave my hon. Friend the impression that the entire proceeds of the value-added tax should be assigned to the Community's budget. No. What I am saying is that, because it is the product of I per cent., the product of that I per cent, must be, broadly speaking, uniform throughout the Community countries, and the scope of the tax must be broadly uniform throughout the Community. I hope my hon. Friend will not pursue me further on this, but I take the point he makes, and I am fully aware of it, and it really does not get away from the fact that foodstuffs are bound to be in any value-added tax to which this country is wedded within the context of the Community.
If I had other reason for doubts about the value-added tax it would be that I remember sitting on the benches opposite when, from the benches on this side, Mr. Robert Maxwell was a great advocate of value-added tax, and I remember his


specific contribution to fiscal thinking in the debates we had under the Labour Government. But, of course, there are weightier reasons to be sceptical about the value-added tax. Are we so sure that the Richardson Report has been set aside by experience? I would be interested to know whether that is the view of my right hon. Friend the Member for Kingston-upon-Thames. One thing I do know: someone who will be well known to hon. Members on this side of the House and probably to hon. Members on the other side, Mr. John Chown, taxation correspondent of the Financial Times, in a very recent article, said—I make only two quotations—
There is no dramatic advantage on exports—
that is, with respect to a value-added tax—
—overseas customers do not pay purchase tax at present.
That fairly reflects the findings of the Richardson Report. Mr. Chown also said:
In practice it is unlikely that a V.A.T. could fully replace both purchase tax and S.E.T. and there seems little real hope of any further transfer from direct taxes at present.
I only conclude that the very complexities of selective employment tax, the absurdities of a purchase tax, would be united and compounded, I suspect, in a value-added tax. There would be disallowances for certain commodities. That we already know. There would then grow up pressure for differential rates. That, I am certain, we shall experience—and already the Liberal Party, with that enthusiasm of those who espouse causes which, if not lost, are almost bound to be, has come in this afternoon advocating regional variations in the value-added tax. We shall end up with a tax which, far from bringing simplicity to our fiscal system, will have complexities the like of which will mean that certain distinguished public statesmen will be called perhaps from their present offices, having once successfully chaired a campaign for the abolition of S.E.T., to campaign for the abolition of the value-added tax.
I realise that I have traded more on the time of the House than I am entitled to but I must make my final point which I believe to be one of the greatest substance. I believe that there is a very real

and genuine area for debate about this Budget, a debate which has not yet really begun, though my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) sought to start it. The challenge of this Budget to the economics and fiscal strategy of this Government must be contained in the answer to the question whether or not the problems of inflation will be eased or compounded by the measures we are now undertaking and though this Budget has flair and imagination and the Chancellor deserves full praise on that account I believe there is a central area of grave ambiguity, and this is in the area of the Government's attitude to money supply. I say this in the knowledge that the final speaker tonight will be my hon. Friend the Member for Horsham (Mr. Hordern), and, therefore, any heresies to which I might possibly give tongue would be but the most mild of doubts compared with what I know to be his feelings on this subject.
My right hon. Friend the Member for Thirsk and Malton quoted the Chancellor. I shall do the Chancellor the courtesy of making the same quotation again. I hope that everybody else will repeat it and think about it. These were the Chancellor's words:
As the rise in costs and prices is moderated, so the aim will be to slow down the growth of the money supply. This will depend on the progress we make in de-escalation."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1374.]
This goes to the whole heart of economic management and the relationship between the administration and money supply. Are the Government to be a passive supplier of money to finance income settlements that have been contrived or bluffed or cajoled in the public sector? It begins to come down to this. Do we believe that the Government are there in some residual rôle financing the outcome of industrial conflict and activity within society rather than seeking to control those events by their indisputed function as the sole creator of money? I believe that the choice which has to be made the one side or the other is the real political, economic and social divide today.
I thought that much credit was due—I hope that I do not sound patronising—to the hon. Member for Stoke-on-Trent, Central (Mr. Cant) who made this point last night without the advantage of the


Yorkshire Post editorial so to instruct him. He also said this:
… I am surprised that, in the last analysis, he"—
that is the Chancellor—
should emerge as a good National Institute of Economic and Social Research man."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1411.]
I think we should be a little careful about those from whom we are getting praise. The National Institute of Economic and Social Research has great academic dignity, but more to the point it has a well-documented relationship between its senior executives and the Opposition Front Bench.
There is plenty of ground for saying that, although my right hon. Friend has produced a splendid Budget in many respects, on this one vital issue—in the area of deficit financing and money supply—I have some residual doubts. Therefore, I welcome the Budget, and welcome it sincerely and unstintingly for its imagination and for the welcome forward glimpse it gives of a more equitable tax system. But on the worrying and socially corrosive issues of inflation and its attendant evils I believe that we are obliged to exercise the charity of suspended judgment.

Mr. Speaker: I call the hon. Member for West Lothian. I think it is reasonable for me in these circumstances to express the hope that the hon. Gentleman will sit down at twenty-five minutes to ten o'clock rather than at 9.30.

9.25 p.m.

Mr. Tam Dalyell: When an hon. Member is given a timetable at the end of a debate he often excuses himself from following the previous speaker. I, on the contrary, must succumb to the temptation and follow the previous speaker—the hon. Member for Oswestry (Mr. Biffen)—in some detail.
I was fascinated by the proposition that what we are having is the Jenkins Budget that never was. Perhaps because at this time of night one becomes irreverent that thought in certain respects had crossed my mind. But in other respects, such as the bias actually towards inequality, it could not conceivably be the Jenkins Budget that never was. In one respect I suspect it might have been

a fourth Mr. Jenkins Budget, namely, in the merger of surtax and income tax. I very much welcome this merger, and many of us begged our own Government to do precisely this. The interesting issue is how a Conservative Government have succeeded in doing this when a Labour Government, or many members of the Labour Government, wanted to do it and failed. One easy answer is that Sir Arnold Francis and his colleagues are wicked Tories and will do it for a Tory Government but not for a Labour Government. I would not accept such a proposition. The truth is that a virgin Government coming in in its first year of office can impose its will on Whitehall in a way that a Government which may be 20 or 25 per cent. down in the opinion polls in its third or fourth year of office cannot do. I do not blame the Civil Service. I accept this as a fact of life. Once again it demonstrates the importance that when a party comes into power it should be clear what it wants to do.
The hon. Member for Oswestry raised the matter of social security. There is present in the House this evening a right hon. Gentleman who probably knows more about the mechanics of social security than any of us, the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). My impression when I interrupted him earlier was that he accepted that the new contribution system was indeed a straight tax. If my figures are right, I estimate that a man earning £18 to £30 a week previously would have made a contribution of 3·3 per cent., and we are now faced with the situation that the man earning from £18 to £42 a week will be paying not 3·3 per cent. but 4·3 per cent., and the introduction of the 4·3 per cent. on the extra £12—£30–£42—is totally new. This will amount to an extra contribution of 60p a week towards the limit.
Can it be said that this is not a tax? At least under the Labour scheme the man would have got some benefit out of it since there was an earnings-related benefit. The present system will mean a straight contribution. Can anybody deny that this is a straight swingeing increase on taxation in the critical area between £18 and £42 per week? My suspicion is that the Government will very soon realise that this is seen as a direct form of taxation, neither more nor less.
My time is limited so I will take up one other matter mentioned by the hon. Member for Oswestry, selective employment tax. I have been a great defender of S.E.T. since it is easily the cheapest tax to collect. How often have we heard hon. Gentlemen opposite complain about increases in the number of civil servants. Is it untrue that the new proposals will mean an extra 6,000 to 8,000 civil servants?

Sir G. Nabarro: Totally untrue.

Mr. Dalyell: It will be extremely difficult to operate for the reason that it is a tax that often lends itself to corruption, to evasion and therefore a large number of expensively paid civil servants is required to counter evasion. Therefore, one probably has to face expenditure of £10 million before starting to get the advantages. As my right hon. Friend the Member for Birmingham, Stetchford (Mr. Roy Jenkins) made clear, it is not a good tax.
I should like to address myself now to the speech of the right hon. Gentleman the Secretary of State for Trade and Industry, and I gave him warning that I should be making these remarks. In his opening speech this afternoon he said that nothing the Conservative Government had done had made the unemployment situation worse. My hon. Friend the Member for East Stirlingshire (Mr. Douglas) mentioned the occasion when Nicholas Harman came to my constituency, and spent a day with me, to do a pre-Budget "Panorama" programme. All who saw the programme will agree that the accounts given by my constituents in Livingston and Fauldhouse were moving, human, non-political accounts of tragic happenings, to blameless families.
What is true is that the Government have made an alteration. The change from investment grants to investment allowances has hit those potential industries which might have gone there. I prefer not to argue in terms of my constituency, because that, in a sense, weakens the general argument.
I refer then to the maiden speech of the hon. Member for Falmouth and Camborne (Mr. Mudd), who, quite rightly, said: "Look at the tin industry. How on earth can the tin industry hope to make any kind of profit in the first

three or four years." This was an absolutely valid point.
I take another example. At enormous expense to the central Exchequer a great new aluminium smelter has been put up in Ross and Cromarty. I have given notice to the hon. Member for Ross and Cromarty (Mr. Gray) that I should raise this point. I was at a political meeting there last weekend and I am fully informed on the position. To attract aluminium-using industries, given the geographical situation of Ross and Cromarty, there must be considerable central Government incentives. No aluminium-using industry, by the nature of the technology, can possibly make a profit in year one, year two, or probably in year three. Profit may come in year four or year five. Therefore, what advantage to such an industry is any favourable response to tax allowances on profits? [Interruption.] I am talking of aluminium-using industries, not the smelter itself. To provide good jobs in the Ross and Cromarty areas subsidiary industries have to be brought in. This is where the worth while jobs for young people are.
I know something about the nature of big projects, because I represent Bath-gate. By bringing in the big project motor industry one does not solve the unemployment problem unless there are the subsidiary ancillary industries. We have not got them. This is partly because there was not sufficient incentive for them to move from the Midlands, for reasons, in the context of the motor industry, which we can understand.
In the context of the Ross and Cromarty and the aluminium smelter project, there is a real difficulty about the change in the system. I do not want to make a great party issue out of this, but I suggest that for the good of Scotland, because we want the smelter project to succeed, we should go back to the old system for certain parts of the country. I do not make this plea on behalf of my constituency, because Ross and Cromarty is far from it, but there is a real Scottish problem here.
I shall now sit down to give maximum time to hon. Gentlemen opposite hoping that the Secretary of State may either care to comment or at least to reflect on what I have said and go back to the grants system for certain areas.

9.33 p.m.

Mr. Peter Hordern: It is my privilege to congratulate my hon. Friend the Member for Falmouth and Cambome (Mr. Mudd) on an excellent maiden speech. I do not think his constituents can be left in any doubt that they have a most redoubtable defender of their interests in this House. We shall look forward with interest to hearing what he has to say on many occasions. Indeed, so much so that I dare say that if by any chance he should happen to catch your eye, Mr. Speaker, before some of us do on future occasions we may bear that state of affairs with rather more than our customary equanimity.
I think that almost all my right hon. and hon. Friends have given this Budget the very warm welcome which it deserves. I say "almost all", but even my hon. Friend the Member for Oswestry (Mr. Biffen) gave it a partial welcome—and that is quite something for him.
The Leader of the Opposition yesterday seemed to me to have a difficult task, and he made it obvious that he was having a difficult task. The best part of his speech seemed to be where he quoted some remarks which he made 15 years ago. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) made a good deal better speech, but that was only because he modelled himself very much on the remarks made by my right hon. Friend the Prime Minister on a similar occasion a year ago.
I have always thought that the Budget should be the visible evidence of a party's policy as well as a Government's economic judgment for the coming year. There is no doubt that this is an historic reforming Budget by a reforming Tory Chancellor. To propose, as he has done, the complete reform of income tax, the introduction of V.A.T., the abolition of S.E.T. and the reform of the corporation and capital gains taxes is and will be a landmark in our fiscal history. There is also to be a major reform of the whole of the monetary and credit system. All this will keep economic commentators in business for months to come.
It is the sort of Budget for which all Conservatives have been hoping, and for which many of us have been working, for many years. There must have been times during the past few months when one could have heard sounds of furious

combat within the Treasury and the Inland Revenue, but the Chancellor has won, and we now have the best Budget we have seen since the war and probably since long before.
Despite what hon. Gentlemen opposite say, it is a national Budget. It has had proper regard for those who are most in need. There is a substantial increase, in fact the largest ever, in the old-age pension—

Mr. William Hamilton: No.

Mr. Hordern: My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) said how much he welcomed the extra provision for the very old, and I share that view. There has been a large increase in the child allowance and an increase in the dependent relative allowance and, of course, the halving of S.E.T. The new pensions will cost £560 million and the S.E.T. £245 million in a full year. Nobody can say that this is not giving a lot of relief to those who need it most.
For hon. and right hon. Gentlemen opposite to carp about the reliefs which have been given to those who have been so hard pressed for years is a remarkable argument. Let us look at these reliefs. On capital gains £1·5 million, on estate duty £10 million, close companies £2 million, surtax £16 million—this year a total of less than £30 million in all. That is the money about which hon. and right hon. Gentlemen are complaining. If anyone has given more help to the surtax payer, it was the right hon. Member for Stechford when he allowed gilt-edged transactions to be exempt altogether from the long-term capital gains provision.
I am glad that there is now to be a sensible distinction between the earnings of husband and wife. This is a long overdue reform of a situation which has caused a good deal of frustration.
What is so refreshing about the Budget—rather like "The Hound of the Baskervilles"—is what is not there. For once, there are no higher taxes in the Budget. That makes a change from the £3,000 million extra taxation in the last six years. There is also a marked absence of the petty jealousy and vindictiveness which has characterised every Socialist Budget. The artificial valuation of trusts for capital gains, even though no disposal has


taken place, has gone. The attachment of minors' income has gone. The whole field of close company legislation is to be reformed. I am glad that my right hon. Friend has put these things right. I hope that the Finance Bill, when it is published, will also include one or two other matters to which my hon. Friends referred particularly when we were in Opposition. I refer especially to the exclusion of unit trusts and investment trusts from the purview of the capital gains tax.
The most significant change lies in the wholly different approach of this Budget from those of the last six years. The difference between this Budget and all previous Socialist Budgets is the difference between a fundamental and far-sighted reform of the tax system and a series of desperate improvisations. The proposals to abolish surtax and to unify incomes under one graduated rate and to abolish the artificial distinction between earned and savings income as well as to increase the level at which estate duty starts are all of immense importance. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was right in referring to the plight of the widow who has to face the sudden burden of estate duty.
This Budget should give the young technically qualified people just the incentive they need, the very people to whom the Jones Report on the brain drain referred, and—

Mr. Barnett: The Jones Report never said anything about taxation being a disincentive.

Mr. Hordern: I am grateful to the hon. Gentleman. I have a copy of the Jones Report here. What it says is:
The attraction of financial prosperity at an early age, carrying with it the ability to set up home in reasonable comfort without stretching resources to the limit is obvious when compared with the likely situation of the young married man here today."—

Mr. Barnett: The hon. Gentleman has misquoted.

Mr. Hordern: I could scarcely misquote what I have just read.
For many years, it has been virtually impossible to make significant savings from income. Now at last—indeed, for

the first time since the war—it should be possible to do so. These proposals for savings should be considered in the context of the prospects for savings as a whole. I welcome the provisions for the new Premium Bonds and the other savings media, but the most important form of national savings—important in its effect both on interest rates and on money supply—remains gilt-edged securities.
I recognise the benefit which gilt-edged will receive from the application of the 30 per cent. short-term capital gains tax. It will certainly help, but is there not a strong case for removing gilt-edged from the ambit of capital gains tax altogether? Of course that will mean that gilt-edged will be more favourably treated than other securities, but there is nothing new in that. The effect would be to help considerably the redemption programme, which is particularly heavy this year, as well as the Government's borrowing requirement.
It should mean that sort term interest rates would fall, and this in turn would have its effect on long-term rates as well. I do not think that the authorities have at all an easy task, and they need every help that they can get.
I and many of my hon. Friends were fascinated by the Chancellor's proposals for monetary reform. I hope that they will lead to the abolition of the ceilings on bank lending and that control will be enforced on all forms of credit, both through control of the money supply and through special deposits.
I should not be surprised if such reforms do not lead to a further change, and that is in the rôle of Bank Rate itself. It seems to me that its rôle is of diminishing importance. I hope that the time will come when the Government will directly control the money supply and liquidity ratios and leave the bank and other institutions to compete for deposits. It has always seemed wrong to me that the Government should dictate to these institutions how they should carry out their business and lend the money. I hope that this will eventually cease. The banks have plenty of money to lend at present, and I should be surprised if Bank Rate is not reduced very soon.
Of course, if these things are to happen, it is important that monetary policy should be effective. I understand that the Chancellor intends to allow money supply to increase by 3 per cent. a quarter, until growth matches productive capacity. This is a fairly precise target. Some of my right hon. and hon. Friends think that it is an unwise target, but is monetary control such a precise instrument? The trouble is that if changes in the exchange rate are ruled out—some of us think it a pity to rule out anything —it is very difficult to pursue an entirely effective monetary policy. Overseas funds can come here or domestic companies can borrow on the Euro-dollar market, and in both cases the money supply is increased, as it was considerably in the December quarter.
Of course, the rules for borrowing on the Euro-dollar market have been changed, but not before there has been a considerable inflow. The Chancellor said that he is operating neither a neutral nor a passive monetary policy. That is fine, so long as the amount by which the money supply is increased is the amount that he had in mind. I do not think that the monetary weapon can be retained with any precision as it is at present used.
In the first place, there is no way of guessing what the foreign inflow will be, but in the second place it appears, if one is to be guided by his public utterances, that the Governor of the Bank of England decides how far the monetary weapon should be used at all. If he is going to dictate his tactics in the gilt-edged market by what he thinks is politically tenable, we will not have a very effective monetary policy. It is almost as if the Chancellor, in relying on monetary policy, were to play golf with Mr. Goldfinger and find that his putter had been pinched on the last green. I hope, therefore, that the Governor will allow the Chancellor to look after the political considerations while he attends to his business of keeping a grip on the money supply.
There is little doubt that the increase of 3 per cent. a quarter in the money supply is reflationary, and is meant to be. Employers are now much more reluctant to meet extravagant wage claims but disturbing features include the rapidly increasing rate of unemployment and the reluctance of companies to invest.
The right hon. Member for Stechford spent a good deal of time on the question of investment. He was critical of the level of manufacturing investment at present and in prospect. It is certainly a serious situation, but nobody could call it new. In real terms, at 1963 prices, investment in new plant and machinery was lower in 1969 than in either 1967 or 1968.
A year ago both the C.B.I. forecast and the Financial Times survey were almost as pessimistic as they are now, but industrialists actually spent a good deal more than they said they would. Indeed, it is particularly interesting to note that expenditure on plant and machinery in the last half of 1970 was higher than in any six-month period for at least three years.
I do not claim that the present position is not dangerously low. Indeed, the machine tool statistics are anything but encouraging. However, I claim that it is too early to despair, judging from the figures that we now have. Furthermore, this Budget, with its emphasis on improving company liquidity, will change the outlook substantially. I do not believe that the decision whether or not to invest is determined solely by the prospect of future profit, though it is certainly an important consideration. Almost equally important, however, is the existing level of company profits and company liquidity.
This brings me back to the essential difference between this Budget and Budgets introduced in the last five years. In this one we see a further reduction of 2½ per cent. in corporation tax and an end to the forced loan of S.E.T., to which my hon. Friend the Member for Surrey, East (Mr. William Clark) rightly referred. This will help company liquidity. We have already had the first reduction in corporation tax of 2½ per cent., and we have also had a change from investment cash grants to investment allowances—that is, allowances against taxation on profits—and this will act as a deliberate incentive towards profits.
We now have a major change in corporation tax. The intention, as my right hon. Friend the Member for Kingston-upon-Thames said, is to encourage distribution rather than retention, and the most favoured system seems to


be a two-tier one somewhat similar to that employed in West Germany.

Mr. Boyd-Carpenter: I did not go quite as far as that. I suggested that the intention, as the Chancellor said, was to be neutral between the two and leave the decision to companies.

Mr. Hordern: I hope that this will be carried out within the corporation tax system itself. Indeed, if the suggestion of the Green Paper is implemented arid the tax on retained profits is to be 50 per cent., there would seem to be advantage in having a common rate of tax; of say, 15 per cent. on distributed profits or by allowing investment against tax on retained profits, as far as the last 15 per cent., so enabling both to be treated equally.
That would encourage firms either to invest in new plant and machinery or to pay it out in precisely equal fashion. This hope certainly contrasts with the double taxation of shareholders under the present system, let alone contrasting it with the increased rate of 45 per cent. from 35 per cent. under the Labour Government.
The results of the previous Government's policy are now all too plain. In five years the gross trading profits of all companies increased by only 7 per cent. The national income, meanwhile, rose by 30 per cent. Import prices have risen by 20 per cent. and basic materials have gone up by about 25 per cent. Trading profits in industry are less than £3,000 million before tax, which represents a return of about 10 per cent. on assets.
As it costs about 11 per cent. to borrow money, and as company liquidity is at its lowest level, there has been precious little incentive in the past to do anything except blame the Government. The trouble is that industry has been blaming the wrong Government. It is the responsibility of the previous Government that profits now form so small a part of the national income, down now to 10 per cent. Companies were made by the Labour Party to feel somewhat indecent in their search for higher earnings. They were examined by the Prices and Incomes Board, told to merge by the I.R.C., told not to merge by the

Monopolies Commission, and generally made to feel inferior by the big and little Neddies. All these influences have had their effect, and the effect is that company liquidity is at a dangerously low level and there is not much disposition to invest.
This is not an easy process to reverse, but we have now made a good start. The I.R.C. and the Prices and Incomes Board have gone, and I hope that we shall hear less of those extraordinary statements from the Monopolies Commission. Above all, company liquidity will be greatly eased by these reductions in corporation tax, and it will come as a welcome change to companies that the Government expect nothing more of them than that they go about their business and increase their earnings. That is what they thought they were there to do. But it would certainly help—as I expect will happen—if Bank Rate were reduced as well.
One thing that we have mercifully been spared in the Budget is any reliance on a statutory prices and incomes policy. It is quite extraordinary that people still talk favourably of such a policy, despite all the evidence of its total failure here and in every country where it has been tried. There are always those who are anxious not so much to cure a problem as to be seen to be doing something about it. On this matter The Times has been more than usually other-worldly. So far as the Conservative Party is concerned, it would not be a pretty spectacle to see taxes being reduced on higher incomes without allowing people to earn those higher incomes because they were faced with a freeze. There is also the fact that the trade unions would never agree to operate such a policy, and, if they did, their members would refuse to abide by it.
The right hon. Member for Stechford accused us of being responsible for unemployment, for inflation and for nil growth. He then took credit for the balance of payments improvement. He might have been a little more generous, as might other hon. Gentlemen opposite, about giving credit where it was due, to the invisable earnings of the City, as my hon. Friend the Member for Surrey, East said. But to do that would be to destroy one of the Labour Party's most cherished myths. I wonder how much longer the right hon. Gentleman will claim the credit for the improvement of the balance of payments


position. I do not remember we in Opposition being given any credit for the improvement that they secured in the balance of payments position in the Budget of 1965. But credit is due to the right hon. Gentleman and to the International Monetary Fund, which was effectively running our economy while the right hon. Gentleman was Chancellor of this country.
As for unemployment, the reason for the present painfully high level is quite plain. It is that while employers may be bullied into paying extortionate wage increases, nobody can bully them into taking on more people or even keeping all the workers that they already have. What would the Opposition have done? Would they have had another prices and incomes freeze? I can imagine the welcome that that would have had from some hon. Gentlemen opposite. As it is, they have connived at every inflationary wage claim that has been submitted. Do the Labour Party think that it was wrong to channel tax reductions towards companies, or to increase the old-age pension, or the dependent relative allowance, or to halve selective employment tax?
The best way to reduce unemployment is to encourage companies to grow. This is what the Budget sets out to do and will achieve.
As for inflation, what kind of prices and incomes policy were the Labour Party running in the last six months before the General Election? We had all the guidelines set out in the White Paper called "Productivity, Prices and Incomes Policy after 1969". We were told that
most wage and salary statements need to fall in the range of 2½ to 4 per cent. increase in a year if the aim of greater price stability is to be achieved.
This came at the end of 1969, before the start of the most inflationary period that we have seen for many years.
We had the right hon. Member for Stechford saying in his Budget speech last year:
Everyone concerned with wage settlements should understand that if we are to achieve the reasonable stability of prices which is necessary for a sound economy and a healthy social framework, incomes cannot for long continue to rise at their present rate."—[OFFICIAL REPORT. 14th April, 1970; Vol. 799, c. 1225.]
What did the right hon. Gentleman do about it? He let loose the largest

increase in the money supply in the whole of our history in the quarter before the General Election. That was the right hon. Gentleman's contribution to holding up inflation.
The contribution of the Industrial Relations Bill will be very significant in terms of higher earnings for companies and in less disruption to their operations. As a result of its passage and this Budget, confidence in business and industry will very soon return. This is a good Budget for the nation. It is an historic Budget for the Conservative Party. This is what we were all sent here to do. My congratulations go to my right hon. Friend for a very successful Budget.

Debate adjourned.—[Mr. Fortescue.]

Debate to be resumed Tomorrow.

CEREALS (GUARANTEE PAYMENTS)

Resolved,
That the Cereals (Guarantee Payments) Order 1971 (S.I. 1971, No. 289), dated 23rd February, 1971, a copy of which was laid before this House on 2nd March, be approved.—[Mr. Anthony Stodart.]

Resolved,
That the Cereals (Protection of Guarantees) Order 1971 (S.I., 1971, No. 290), dated 23rd February, 1971, a copy of which was laid before this House on 2nd March, be approved.—[Mr. Anthony Stodart.]

EXPERIMENTS ON LIVING ANIMALS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fortescue.]

9.57 p.m.

Mr. Kenneth Lomas: I am grateful for the opportunity to raise this matter at such an early hour. I am sorry that there is no one on the Treasury Bench at the moment to answer the debate, but no doubt that will be put right in due course.
I begin by pointing out to hon. Members that before this 30-minute debate is over there will have been 300 experiments on live animals in this country. In 1960 the number of animals used in research was about 3½ million, and the number of vivisectors who could legally perform


experiments was about 7,000. In 1969, the number who could legally perform experiments on live animals had increased to 13,791. This was matched by the all-time record number of animals used, a total of 5,418,929. If my arithmetic is correct, that works out roughly at 100,000 a week, 14,300 a day, 600 an hour, or 10 for every minute of the day and night, seven days a week, all the year round. I cannot believe that this is necessary.
I am not a total anti-vivisectionist. I accept that it may well be necessary to carry out certain experiments in the interests of research and science. But I question whether it is necessary to use so many animals.
In 1969 the total number of Home Office inspectors appointed to supervise this method of research was only 13. In 1969 there were 13 Home Office supervisors to look after 14,000 vivisectors performing 5½ million experiments.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jasper More.]

Mr. Lomas: It is for these reasons that I suggest that there is a need to establish a research institute to study and develop methods not including the use of animals. I believe that the establishment of such an institute would be welcomed by scientists and the general public.
Hon. Members and especially the right hon. Lady know as well as anyone that there is tremendous concern about animals, and that if our postbags are full of nothing else they are full of letters about animals. But I am sure that the vast majority of constituents of hon. Members on both sides of the House would be horrified if they knew of the total number of live experments in this country.
I like to think that such a research institute would be vested in the Medical Research Council, the Government's principal agency for the development of medical research, but if that is not acceptable, some alternative method has to be found.
It has been calculated by the National Anti-Vivisection Society that the cost of such a research institute, including running costs for the first five years, would be about £1 million. That is not an excessive sum of money to stop the needless cruelty and pain inflicted on animals and by the establishment of such an institute it might well be possible to increase our knowledge for the benefit of science and the future well being of the people of this country.
The functions of the institute, as I see it, would be to collate information from all over the world concerning techniques which negate the need for the use of animals, and to study, develop and expand their use generally in medical research. There is no doubt that there is concern in areas of medical research which are currently involved in the extensive use of animals, with the standardisation and testing of drugs and the manufacture and testing of vaccines and sera, and there is substantial evidence to suggest that such tests can be made effectively in vitro using cell and tissue cultural methods without recourse to live animals, and such techniques have been shown to be more reliable, quicker and cheaper. If the Minister would like me to send her a list of references appertaining to this aspect of the use of cell and tissue culture, I should be glad to do so.
I do not pretend to be either a scientist or a doctor, but from what information I have been given it would appear that we in this country are lagging behind many other countries in seeking an alternative method of research. We are certainly behind the United States of America, the Soviet Union, Yugoslavia, Finland and Germany. We pride ourselves on being a nation of animal lovers, and yet there are 5½ million animals used for live experiments in the course of any one year.
If such an institute as I suggest were established, it would give tremendous impetus to the search for alternatives, which must be welcomed by all concerned on humanitarian and practical grounds. It could lead to the discovery of new methods of research far superior to those involving the use of animals both in terms of economy and reliability. It is sometimes said by Governments and organisations interested in such matters that the


use of animals in experiments is a regrettable necessity. If that is so, and if the present Government are truly concerned at the increasing volume of animal experimentation, the establishment of a research institute along the lines I have suggested would be a practical demonstration of their sincerity and an enlightened step forward to deal with a situation which reflects credit on no one.
Since the Cruelty to Animals Act was passed in 1876, 95 years ago, not a single Amendment has been moved from either side of the House that would lessen the pain inflicted on the animals involved in experiments. The experimenter has been protected, but the animal has not. In the 50 years from 1919 to 1969 over 90 million animals died as a result of experiments, and almost every one of those experiments inflicted some pain or suffering on the animal concerned. It is time we found an alternative method. I understand from the National Anti-Vivisection Society that it has written to the 14,000 licensed vivisectors in the country asking for their views on the creation of such an institute, and the replies so far have been most encouraging.
The question goes beyond the boundaries of Britain. Earlier this year the Consultative Assembly of the Council of Europe, following a recommendation from its Science and Technology Committee, argued the case for a thorough study of the whole question of experiments on live animals. It suggested that a Commission should be appointed to draft international legislation setting out the conditions and the scientific grounds on which experiments on live animals could be authorised. It also argued that there should be a documentation and information centre open to all interested parties to collect information on the types of experiments carried out, the kind and number of animals used, and the alternatives to the use of live animals, and that experiments on live animals in schools for teaching purposes should be forbidden, and that such experiments in universities should be limited by replacing them with new visual methods.
I am deeply honoured that the Secretary of State for Education and Science is to reply to the debate. It is a great privilege that we should have someone from the Cabinet who is interested in the subject here tonight. In far too many

schools—I speak as a father of three children—children are being taught to love, care for and look after animals which at a later stage are being used as subjects not necessarily for vivisection but certainly for dissection and experiments of one kind and another. I deplore that.
I return to my main point, the need for the establishment of a research institute to study and develop methods not including the use of animals. Will the Secretary of State give a firm assurance that such a proposition will receive sympathetic consideration, and assure the House that she is in favour of reducing, if not totally abolishing—which I accept we cannot do, the number of vivisections in this country, in the interests of humanity, the animal kingdom and the people who love animals?

10.5 p.m.

Mr. Douglas Houghton: I apologise to my hon. Friend the Member for Huddersfield, West (Mr. Lomas) for not having been here when he began his speech. The debate came on a little sooner than I expected. May I also explain that although I am speaking from the Dispatch Box I am not speaking on behalf of my right hon. and hon. Friends; I simply did not know where else to speak from. I want to add a personal word of support to my hon. Friend and to join him in congratulating the Secretary of State on giving the debate her personal attention.
I regard the treatment of animals by human beings as one of the great moral issues of the day. I am sorry that this House does not take a great deal more interest in this side of research and experimentation and the treatment of animals. Members of the public are rightly shocked when they read of cases of extreme cruelty and neglect of animals and see television programmes on the subject. What they do not know is what is going on behind the scenes. They would be appalled if they could see the fate of many laboratory animals.
When we read the report of the Royal College of Physicians on the health hazards of smoking, many of us, I am sure, were horrified to learn that animals were compelled to smoke cigarettes for hours a day, for weeks, for months and possibly years on end, in order to show


what the effects of the smoking of cigarettes would be on live tissues. The spectacle of animals with cigarettes tied to their snouts and compelled to breathe in tobacco smoke in this way in order that human beings might know whether addiction to tobacco is harmful to their health is really a monstrous form of experiment.
If human beings want to know whether things are bad for them they should try them on themselves and learn from their own experience. The enormous growth in the number of experiments is something to which Parliament should give attention. The real difficulty is to find out what is really going on. This is a closed shop. The cameras do not get there. Personal inspection is frequently refused not only in medical research establishments but in defence research establishments also, dealing with poison gases and noxious liquids of one kind or another. We are really using animals to find out what damage things do to them in order that human beings may be saved and in order that we may know what damage certain things will do to our enemies in the event of war. This matter deserves a longer debate on some future occasion, and I hope that we shall have one.
I am deeply moved by this kind of thing. It is quite untrue for many people to suggest that those who take an interest in this matter are either cranks or sentimentalists, or for some reason or other love animals more than children. That is the kind of snide suggestion sometimes made against those working for animal protection.
Experimenters should not be hidden away or their work shut off from public gaze or independent inspection by those who can convey their findings to the public. Numbers are not enough. The long standing Act of Parliament on this matter needs to be rewritten and brought up to date in order to conform to modern standards on this great moral issue.
When I read of animals being used in order to see whether certain cosmetic treatment for women will be harmful to the eyesight of animals, I find it quite horrifying. One may justify using animals—but it is difficult to do so—in order to discover some of the secrets about dread

diseases which are afflicting the human race, and especially perhaps diseases which afflict animals themselves. But to use them as a basis for testing out cosmetics is an abomination.
I fully support my hon. Friend's plea to the House and to the right hon. Lady to consider every conceivable means of finding alternatives to the use of animals for experimentation. That is all I have to say. I am obliged to my hon. Friend for raising this subject and I hope that, in all the great issues confronting Parliament, this one will not be lost sight of. It is one of the great moral issues of civilised society.

10.15 p.m.

Sir Ronald Russell: I should like to support the plea made by the hon. Member for Huddersfield, West (Mr. Lomas), as the honorary secretary of the Animal Welfare Group in this House. One point he did not touch upon is that the reaction of animals to experiments is not always the same as that of human beings.
Therefore experiments on animals are not always reliable in giving guidance as to whether a drug will be safe.
I know that this is a Home Office matter and not my right hon. Friend's responsibility, but it is now six years since the Littlewood Committee reported to this House. Not only have we not had a debate on it but no steps have been taken to implement its recommendations. Some of them are probably out of date now. I wonder whether my right hon. Friend could make representations to the Home Secretary about this and see whether something can be done.
I have a feeling that there is a resistance to something being done about this. Some of those engaged in research using animals become hard-boiled in their attitude towards those animals. This is inevitable, and it is no criticism of these people, just an unfortunate fact of life. That seems to create resistance towards reducing experiments. The scope of these is appalling and it is increasing every year. There must be an enormous amount of duplication. I support the hon. Gentleman's plea for this research institute to be established to consider alternative methods and I hope that my right hon. Friend will be able to give some encouraging information.

10.17 p.m.

Mr. Harold Walker: In 1966 I had the pleasure of raising a related matter on the Adjournment, and I have it in mind now because when we consider this matter we must realise it is not only a question of the distress caused to the animals involved.
There is also the wider distress which often arises from the number of animals used. So long as this experimentation takes place and so long as the practice grows there will be a need for animals, and, as was indicated in the Littlewood Committee Report, so long as there is a shortfall in the number of animals coming from breeders for this purpose there will be an inducement and incentive for criminal elements to obtain animals improperly, animals which are often children's pets.
There is unquestionably a traffic in illegally obtained animals, often stolen. This also is a matter which causes distress to the owners of the stolen animals. While I accept that this is not the right hon. Lady's responsibility, I want to put this in support of the case made by my hon. Friend the Member for Huddersfield, West (Mr. Lomas).

10.19 p.m.

The Secretary of State for Education and Science (Mrs. Margaret Thatcher): I am grateful to the hon. Member for Huddersfield, West (Mr. Lomas), my hon. Friend the Member for Wembley, South (Sir R. Russell) and other hon. Members for raising this matter. My time is brief and I will try to get as much information as possible into the reply.
The statistics given by the hon. Member are very striking and arouse strong feelings. But there may be good reasons for them, and I should like first to examine them.
At present the use of animals is essential not only for the advancement of biomedical research but also in routine safeguards for the health of the community. An increasing number of drugs and food additives have to be initially screened and tested on living animals, often as a legal requirement, before they may be administered for clinical purposes. It would, clearly, not be possible to use human subjects for such purposes, in view of the toxic hazards involved.

Again, some diagnostic tests carried out in hospitals and public health laboratories are dependent on the use of animals.
The development of vaccines and drugs for use in veterinary medicine is similarly dependent upon screening and testing in other animals. Indeed, advances in veterinary medicine and surgery and particularly in the prevention of communicable disease, are no less dependent on animal experiments than their counterparts in human disease.
Again, fundamental knowledge of the nutritional requirements of domestic animals derived from animal experiment has made it possible to prevent much sickness and misery. Any unnecessary restrictions on animal experimentation would thus be deterimental to progress in veterinary science—the progress of agriculture and the welfare of domestic animals and pets—in just the same way as it would hold back research into the problems of human disease.
Furthermore, to maintain the present rate of progress in the bio-medical field as a whole, but particularly in such subjects as cancer research, toxicology, ophthalmology, pulmonary diseases and mental illness, the use of experimental animals will continue to be essential in the foreseeable future.
Although advances continue to be made in the search for effective alternatives to animal experimentation, it is the view of the Medical Research Council that the use of animals remains essential for the advancement of medical and biological research. The progress of medical science—and conseqeuently of medical practice—on the scale and rate that has occurred in recent years would have been impossible but for such experiments.
The hon. Member has laid particular stress on the present scale of animal experimentation. It is true that in recent years there has been a steady increase in the number of experiments on living animals. The background to this trend was reviewed by the independent Departmental Committee of Inquiry the Little-wood Committee, which, in 1963 to 1965, examined very thoroughly and in detail the working of the present controls over animal experimentation. After reviewing the enormous expansion of biological science since 1876, and all the operational factors involved in the use of animals for


experimental purposes, the Committee pointed out that
the increase in the numbers of animals used in reaserch is largely to be explained by the expansion of biological science and the mandatory testing of biological substances.
In paragraph 73 the Committee further said:
Our general conclusions are that, in spite of strong incentives to the avoidance where possible of animal experimentation, the discovery of substitutes for animal tests is not likely materially to affect the demand for animal experimentation.
The hon. Member referred to the controls and safeguards in this country over the use of animals for experimental purposes. Although our legislation dates back to 1876, its basic principles are not out dated. The essential feature is that the person who conducts the experiments must hold a licence, which is only issued on certain stringent conditions. If he does not continue to satisfy these conditions he may lose it. Restrictions are imposed by the Act on the purposes for which animal experiments may be carried out. It prohibits absolutely the performance of any experiment liable to cause pain unless it is undertaken with a view to the advancement by new discovery of physiological knowledge or of knowledge which will be useful in saving or prolonging life or alleviating suffering, or the acquisition of such knowledge by persons attending lectures at medical schools, hospitals or elsewhere. Experiments of this kind are not, and would not, be permitted in schools in this country.
Restrictions on the infliction of pain are imposed by and under the Act with the object of ensuring that no animal under experiment suffers severe pain that is likely to endure, or avoidable pain of any kind. Within the Medical Research Council's organisation the majority of animals are specially bred in the Council's own laboratories. When requirements cannot be met from internal sources, all M.R.C. establishments are under instruction to purchase animals only from sources accredited or recognised by the Laboratory Animals Centre.
In spite of everything I have said, research workers generally will always prefer experimental methods which do not involve animals where such methods are effective. The reasons are first

humanitarian, secondly economic, and thirdly convenience. We do not have to persuade scientists not to use animals if other methods are effective. They would be anxious to do so for those three reasons. Any new procedures which give equally successful results are taken up rapidly. British scientists—not least those working under the auspices of the Medical Research Council—have made steady progress in introducing alternative methods. In recent years, many techniques have been developed for tracing and measuring biological substances which have helped to reduce the need for animal experiments.
I quote as one example among many the development of immunofluorescent assay. This is the method of measuring the concentration of a substance by combining it with a suitable antibody, the concentration of which can be measured through its property of fluorescence under ultra-violet light.
Originally this method arose out of studies of immunology but research workers at many centres have developed the technique for different biological substances, and it is now in widespread use.
Again, much effort has been concentrated on the rôle of human diploid cell substrates in the production of virus vaccines. Diploid cells are those with a full complement of chromosomes. As a result, both rubella and measles vaccines based on human cell cultures have been licensed for sale in the United Kingdom.
Methods involving human material have their own problems. Clearly, it is possible unknowingly to transmit disease by this method while trying to cure another disease.
Quite recently scientists at the M.R.C. Clinical Research Centre have developed a method for detecting the toxin produced by cholera bacteria which is responsible for the disease. The method is based on the effects of the toxin on cultures of living cells and is simpler and more sensitive than previous methods in which animals were used. Progress has thus been made towards identification of the active principle of the toxin and its molecular structure.
Apart from work on living cell systems, the introduction of computers has paved the way towards introduction of mathematical models. A measure of success


has been achieved, but the great complexity of biological systems inevitably means that difficult problems remain to be surmounted in devising valid analogues.
These are but a few examples of alternatives to animal experimentation. I would however strongly emphasise that all such developments arise from a particular research problem. Indeed, work of this kind is more likely to be fruitful if pursued in close conjunction with the scientific research activity to which it may be applied.
Results become widely known through scientific literature and are, therefore, adopted by other workers in relation to their own particular research problems. This is well illustrated by the technique of immunaluorescent assay mentioned earlier. Its wide area of application was achieved despite the fact that each new extension of its use has required further research effort, even though the basic technique was well established.
I have stressed this aspect since it has a crucial bearing on the subject under debate. The fact is that progress is likely to be quicker through existing scientific channels than by pursuing the search for alternatives outside the main stream of research.
On all the evidence from work in the field, and progress with alternatives so far, an institute created with the primary object of reducing animal experiments would be unlikely to be as effective as existing approaches mainly because of the difficulties of ensuring that the staff of the institute kept in day to day contact with the specific problems for which animal experiments are needed. Indeed the Medical Research Council is not in favour of establishing an institute for the development of alternative techniques in isolation from other research; rather, it has chosen to encourage new methods by the development of specialist sections and divisions within its establishments where staff with special technical skills can work with other scientists to the best mutual advantage. The Council gives active support to the development of new techniques when they show promise of improvement on existing methods, and I should be glad if the hon. Member would let me have details of the instances where he thinks we are behind other countries.
The need for collaboration between disciplines is one of the principal facets of the Medical Research Council's research policies; this policy, which has been justified by the many scientific advances which have been achieved over the years under the Council's auspices, contributes to the development of alternatives to animal experiments. Moreover the Council's policy of placing its own establishments within universities whenever possible ensures both that the Council's staff have access to the widest possible range of scientific disciplines and also that any developments achieved by the Council's staff are rapidly communicated to a larger scientific community. I do not, therefore, feel able to accept the hon. Member's proposition that the addition of a new institute, which might well find itself out on a limb, would be of any significant help.
I repeat that scientists are anxious not to have to use these methods when proper alternative methods are available, and the search for those methods continues, and will go on as it has in the past.
One final point. The hon. Member mentioned that other countries are ahead of us in this. This general assertion is often made, but it has never been backed up by detailed examples and facts. If the hon. Member has any we should be very grateful if he would forward them to us.

Mr. Lomas: The right hon. Lady tonight has read from a brief and not spoken from her heart. I think she will agree with me that we have to do something about the position which we have in this country and experimentation with animals. The Council of Europe is on record as proving that the Soviet Union, Germany, Finland, the United States are ahead of us on this, and I am very upset that the right hon. Lady has decided tonight that she is not in favour of a research institute to find alternative methods.

Mrs. Thatcher: I may have read from a brief, but I myself carefully studied it, and I did it myself, because I have a scientific background and felt that I might even understand the brief.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.